Monday, August 22, 2005

Understanding Nation Building (Part One)

Recently there has been a “blueprint” or vision published/announced by UP people. While it is a welcome thought that we have sectors of society actually thinking, their points need to be considered properly and I shall attempt to do so.

Their “Blueprint for a viable Philippines” may be found here.

We will attempt to analyze and comment per section when need be. We quote what they're trying to say, then provide our own answer and/or comment or offer our views to or against their views. The purpose of this... is to encourage discussion and maybe together we all can find a way to make it a better country.

Since this will be rather lengthy, we will handle maybe two or three points of discussion per post. This part one and we discuss points on “New Government”, “Debt” and “On Social Justice and Taxation”

New Government


If we are serious about changing our form of government, we should first prepare the ground on which the new forms could grow. For example, an effective parliamentary system requires the participation of mature political parties that are not dominated by strong personalities and dynasties. By promoting and improving the existing party-list system, we may be able to develop the kind of political parties we want. A federal system, on the other hand, demands the prior existence of stable institutions and mature constituencies at the local level. We should do so even now by deepening the base of political participation. But most importantly, any attempt to design new forms of government must draw its wisdom from the democratic participation of the people. All these cannot be merely legislated into existence. Constitutional revision in a time of cynicism may be a fatal mistake.”

Big Mango:

We must ask ourselves, when is a good time to change? Was it when Rizal was shot? Was it when Aguinaldo lost the first Republic? Was it when Quezon and Commonwealth started? Was it during Marcos? Was it during EDSA I, II and III?

We ask ourselves, why must we change?

Everyone agrees that we are in a box right now. Too many people are disillusioned about the way our country is ran. We are jaded because our leaders have failed to live up the high standards that we are correct in erecting. We are saying that there must be a shake up--- a top to bottom house cleaning, yet we are afraid to shatter the norm, to challenge convention, to innovate.

We say that our leaders and our way of life is such, pardon the language “shitty”--- that our institutions are in such state of disrepair that we are cynical about our own government.

Revolutions bring about their own seeds of destruction, someone once said. I say, wouldn't it be high time we evolve?

The greatest ideas in history introduced such radical thought--- Jesus, Einstein, the Wright Brothers, and so many others yet when you think about it, those ideas those concepts were built on the foundations of other people's work. They were the next step, the next level and they saw them.

Why can't we change now? Why can't we shatter convention of what others have done but instead of a revolution which tend to forget the past, we build on it.

Building a Federal government is probably the best way to go. We have been a centralized government since the Spanish ruled here, perhaps the other way will benefit us.

With a Federal Government, we can encourage development in the country side. Development can be on a per provincial or regional level. Those governors know what their people want. The people in the country side know what they want. We should trust them.

If you travel the Philippines, each region is a paradise. We are an industrious people. Yet the treasure that's fat is on the national level.

You may say what happens to the poor regions? They have to work hard then. They must create industries. They must elect better leaders.

With a federal government, we create a much simpler country.

On a national level, there should be fewer representatives. Its just not practical to have two hundred people making laws on the national level when the people are represented in their own “Regional” or Provincial Level. Thats why laws are not passed quicker. Too many cooks.

Any national legislature must be proportional--- may be two per province. There becomes a balance between population density and speed and quality of legislation.

I see two reasons why people are “afraid” of charter change, the first--- they just don't trust the people (Congress) in drafting a new Constitution. Second, they don't know what the heck we are talking about.

If we let Congress draft our next Constitution, it can always be vetoed by the people in a referendum. If we truly want a clean slate, a Convention of the Great Minds of our country must come together. They must not be just politicians. They must not just be from the Academe, the must be bankers, lawyers, businessmen, common folk.

If two hundred years ago, farmers helped draft the United States Constitution, it shouldn't be difficult to do it today.

We have to make whats right for us, today. Think out of the box.


Blueprint Analysis:

The process of securing new loans to pay off old debts reduces our ability to explore new avenues for growth. Moreover, allotting a growing portion of the national resources just to meet interest and principal payments is no longer sustainable. It sacrifices the basic needs and well being of the masses of our people just to satisfy our creditors. This is slow suicide, and it is immoral.”

Blueprint Recommendation:

Government will initiate a comprehensive debt audit aimed at uncovering the hidden history of our indebtedness and assigning responsibility for this national burden. In line with this, government will investigate the settlement of fraudulent and behest loans, highlighting the complicity of international institutions and creditor banks in the contracting of odious debts as well as the role of local agents (e.g. law firms and government offices). It will form a multi-sectoral panel to re-negotiate official debts with other governments and multilateral institutions, with the end in view of securing a minimum 5-year relief from interest payments. This will give us sufficient space in which to grow and attend to the needs of the very poor. As in the case of private sector borrowings, issuance of sovereign guarantees for government owned and controlled corporations will be discontinued. The Debt and Risk Management Unit will be strengthened. The prime objective is to reduce the debt stock and secure advantageous terms for the government.”

Big Mango:

Do banks and financial institutions really care who borrowed and for what purpose? Any ordinary person who borrows money from the bank when given money is required to pay for it. It doesn't matter whether or not it was used properly, the whole point it was borrowed at all! Any discontinuation of such loans will be detrimental to future business. People just won't trust you anymore. In the world of international business, in the world of nation-states, such a move will be suicidal.

Debt, is not the problem. Debt is used every day. It is good fiscal management that is key.

Borrowing, floating bonds to pay off old debts is a normal practice in business. The fact of the matter, if money borrowed is managed properly, then there is no reason why a nation like any business should show a profit, and progress.

Sure, we can always ask for a restructure of loans to pay for the debt incurred. But it should not be because those funds were misappropriated.

If we believe that there has been mismanagement of funds over the course of the past forty years, we must bring those people to jail.

Otherwise, we must look forward. This is the situation now. We have huge debt. We have to pay for money owed. And we should do so. We work with it.

We do so by making the government small--- lean mean fighting machine. A federal government can help with that, we spend less on how our government works. Trimming the fat on government corporations will help--- the revenue earned goes into the debt payment. (more on this later)

Do you realized that in spite of the political set backs of the past five years, our economy has been growing at 4% GDP. Thats an economy basically on autopilot.

Imagine, just imagine, if we are in fact hell-bent on economic performance, what wonders we can create?

Social Justice and Taxation

Blueprint Analysis

Protect and increase expenditures allotted basic social services and social justice programs as these benefit the poor and serve as the foundation for long-term growth. Shift to a simplified, universal and equitable gross taxation system. Shift from specific to ad valorem taxes in the case of liquor and cigarettes and petroleum products, carefully guarding against clever transfer pricing schemes aimed at avoiding payment of higher taxes. Instead of the administration-sponsored VAT bill that was recently passed by Congress, address the leakage problem. This includes arresting the losses of the National Power Corporation (NPC) by junking the administration’s populist policy and renegotiating NPC contracts with independent power producers (IPPs). End the financial hemorrhage of the Metropolitan Waterworks Sewerage System (MWSS), which includes immediate drawing of Maynilad’s performance bond (amounting to US$120 million). Support the BIR’s administrative reforms that address leakage. Broaden the over-all tax base. Explore presumptive taxation. Practice the polluters pay principle by putting in place a targeted petroleum tax targeted at the car-owning middle”

Big Mango:

On Social Justice

First of all, we must realize that “shit happens”. People the world over may be in poverty. The best form of social justice that we can do is what Jesus already taught us: “We teach people how to fish”.

What the Blueprint is advocating a Social Justice on the ground of hand me downs. The hand me downs we should be providing, is free education for all. Free Education translates to every child going to a public school from grade school to high school is fed properly. Every child going to public school should each have books and supplies. Every child is well cared for in this department. We must not give an excuse for any child not to go to school.

A good well rounded education is what our people need. When we say education, it doesn't translate to how well they can read or how well they can spell. It translates to how well the children of our tomorrow thinks.

They must be creative and innovative as much as they know how to compute. It must be a balanced education. One one hand they should be proficient in math and science but on the other hand excellent in history, the arts, in classical literature and music and sports. We owe the next generation Filipino that they be people.

They must after finishing high school, be learned adults capable to work. This is true social justice. This is the hand me down our people need.

But that's it.

People shouldn't expect to have free health care.

People shouldn't expect to have any free lunch, unless they've worked.

On Taxation

Second, Taxation has always been a concern of Economics the world over. True, we must clean out our tax services--- they should be the first agency to be the focus of anti-graft and corruption investigations. If we must enact a simpler Tax Code, then so be it and we must do it while we clean up the Revenue Service.

Bottom line, government should get out of business. Why do we need government controlled corporations? Sell the lot of, irregardless whether or not these institutions are making money or not. Government has no right to own businesses, but it does have the right to regulate them, to level the playing field.

When governments run a business, their purpose is never to make money. They never run efficiently. When you sell government controlled corporations, these companies will be forced to run efficiently or die.

If the argument why government runs a business because it has to protect people's interest, you know thats a whole lot of crap. If people need a service, they must pay for it. Thats the capitalist way. If they don't pay for it, then the business dies. Nothing is for free in this world. So choose to pay for the service or not, its up to the people to decide then.

Now with regard to new taxation, do we really need it, if (a) the government privitizes all government controlled corporations (including those gambling operations) including the trimming down and merging of executive offices of simiarl function as well as hospitals and other services, (b) execute a comprehensive reform of the internal revenue service, (c) reduce graft and corruption, year-on-year?

But you know, right now, at the level of efficiency the Philippine government is working, we need new taxation. We need to provide for our hospitals, our schools, our roads, our bridges.

There is no over night solution. More on that in succeeding posts.