Manifesto: Advance authentic agrarian reform
that achieves rural development
and industrialization!
Consequences of Joint Congressional Resolution Extending the CARP
On 17 December 2008 a Joint Congressional Resolution was passed extending the Comprehensive Agrarian Reform Program (CARP) for six months, twenty years after its enactment, with the proviso that takes away the obligatory character of the land acquisition and distribution (LAD) aspect of that program. The Resolution can become law if not vetoed by the President. We would then have either "LAD on demand" or "optional LAD" or both.
"LAD on demand" would be dependent upon the strength and readiness of farmers' organizations loudly demanding LAD in their areas and the effective budgets of CARP in the government budget (General Appropriations Act). "Optional LAD" on the other hand would make the program completely dependent on landlord voluntarism, or an extension of landowners' voluntary offer to sell (VOS)—not strictly impossible, if one looks at the financial incentives. In either case the Joint Resolution will most probably end up in the Supreme Court as a constitutional question.
Agrarian Reform and Rural Development in the Philippine Constitution
In Article II (Declaration of Principles and State Policies) of the Philippine Constitution we, the sovereign Filipino people, who had earlier implored the aid of Almighty God to build a just and humane society, promote the common good, conserve and develop our patrimony, and secure to ourselves and our posterity the blessings of independence and democracy under the rule of law, put it in black and white as a constitutional mandate that "the State shall promote comprehensive rural development and agrarian reform" (Article II, Section 21).
In Article XII, discussing the National Economy and Patrimony, our Constitution states that "The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged" (Article XII, Section 1).
To that end, the Constitution immediately follows up with the mandate that "The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets" (Article XII, Section 1).
Not content with that, the Constitution, in Article XIII (Social Justice and Human Rights) even devotes several sections to Agrarian and Natural Resources Reform (Article XIII, Sections 4 to 8), in one section of which it would mandate the State to "undertake an agrarian reform program founded on the right of farmers and regular farm workers who are landless, to own directly or collectively the lands they till or, in the case of other farm workers, to receive a just share of the fruits thereof" (Article XIII, Section 4, underscoring supplied).
Unfulfilled Promises Regarding Agrarian Reform
We have often heard the managers of agrarian reform report a two percent reduction in poverty after many years of spending billions upon billions of pesos in the land acquisition and land parceling-out program. This simply is not good enough!
Many long years back we were assured by government, in the very first sections of the agrarian reform law, that the "welfare of the landless farmers and farm workers will receive the highest consideration to promote social justice and to move the nation toward sound rural development and industrialization" (R.A. 6657, Chapter I, Section 2). In this way, had the conditions for economic development and the creation of new wealth been already put in place, even in the subsequent years, including giving tillers access to capital, technology and markets, many of our people could already have become richer or less poor.
Our Constitution was quite explicit in mandating the State to "provide support to agriculture through appropriate technology and research, and adequate financial, production, marketing, and other support services" (Article XIII, Section 5).
The State could have provided "farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands" (R.A. 6657, Chapter I, Section 2). Needless to say, however, this did not happen.
The State promised to be guided "by the principles that land has a social function and land ownership has a social responsibility" (ibid.). For perhaps the first time in Philippine history, the non-absolute character of land ownership was affirmed in law. "Owners of agricultural land have the obligation … to make the land productive" (ibid.). In that regard, through the Constitution the State committed to assist them, as already stated, "through appropriate technology and research, and adequate financial, production, marketing and other support services" (Article III, Section 5).
But again, obviously, the commitment was not adequately realized—in part because of the imbalanced identification of the whole agrarian reform program with one part thereof—land acquisition and distribution—which would routinely eat up more than three fourths of the total program budget to the near-total neglect of its connection to the very goals of the program, namely the enhanced dignity and improved quality of farmers' lives and people's liberation from poverty with the promised rural development and industrialization.
Elsewhere, moral leaders had warned that "the experience of agrarian reform, put into action by many governments and many countries, has failed miserably …because of a kind of 'original sin' which impeded their success: that of being almost exclusively identified with the expropriation of land and its subsequent sub-division. All this is certainly necessary and fundamental ... but it is not enough (in no. 3 of "Land, A Common Good of All Humanity," a statement by Roger Cardinal Etchegaray on the occasion of the issuance by the Pontifical Council for Justice and Peace on 23 November 1997 of the document "Towards a Better Distribution of Land: the Challenge of Agrarian Reform").
Taking Up the Correct Underlying Principle of Agrarian Reform
We support the vigorous and persistent efforts of various farmers' organizations and their supporters from people's organizations, social movements, and institutions, including the Church, to correct the defects in the present CARP and to come up with a new agrarian reform law and program that will truly benefit our farmers and the country at large.
In this connection, we strongly reaffirm and emphatically reiterate the underlying principle of agrarian reform: land does not belong to the landowners alone—old or new—but to all the people. It is a limited resource for a growing number of humans, all of whom, to the very last one, are without question "land animals." The very space in which to extend their being involves the occupation of land. Land ownership has to be inescapably regarded as stewardship—that is, merely a means to attain the ends of land use which are: food security for all; decent habitats for all; and an ecologically harmonious economic regime for the common good.
We therefore urge the responsible authorities and the people generally, but especially our fellow farmers and farm workers, to re-focus attention on these original goals of agrarian reform—greater and sustainable productivity of agricultural lands, and moving the nation towards rural development and industrialization.
The current legislative-executive crisis offers us a unique opportunity to craft a new law on agrarian reform and rural development. We believe it is not too late to achieve authentic agrarian reform and thus establish the foundation for our country's leap to overcoming poverty and Third World nation status and finally becoming a strong carefully industrialized national economy—in other words, a First World country at last.
Admitting and Rectifying the Failures of the State
This would mean affirming anew, as we do now, that without this kind of development in the economy, even social justice measures will redound to worse poverty and will fail to bring about prosperity for the many. This has been the Philippine experience for decades now, as various governments tried to implement a "land reform" program in the crude sense of land acquisition and distribution, but failed to focus on the clear goals of development and industrialization.
The state even missed out on the constitutionally and legally mandated support services in the three crucial stages of the process related to the production of agricultural goods—pre-production, production proper, and post-production, and thus our newly "emancipated" peasants have had a very hard time coping. Many of them ended up much worse off than during their share tenancy years. Who could blame them if they often felt that they would have been better off with a caring paternalistic feudal lord?
Most significantly, Central Luzon and Southern Tagalog, which were the original regions that demanded authentic agrarian reforms, hardly make it to the top five regions of agrarian reform beneficiaries. Massive land conversion to purposes other than agricultural left many of these areas with neither farm nor farmers. In many areas, the CARP became the worst real estate scam in Philippine history, barring none.
Under the law, the Department of Agrarian Reform (DAR) was mandated "to carry out land consolidation projects to promote equal distribution of landholdings, to provide the needed infrastructure in agriculture, and to conserve soil fertility and prevent erosion" (R..A. 6657, Section 39). This hardly happened. What often happened was the exercise by DAR of its power under the CARL that "when the land ceases to be economically feasible and sound for agricultural purposes … to authorize the reclassification or conversion of the land and its disposition" (Section 65). And so it happened that one hectare after another of the most valuable top soil came under the bulldozer, never again to contribute to our people's food security.
We must stop the folly before it is really too late. Let us craft a more focused piece of legislation now. Mere extension or more of the same constitutes a grave danger to our national security.
Return to Basics
It is time to return to basics. We must effectively recognize Land—including all natural resources—as a distinct factor of production, distinct from and yet together with Labor and Capital, making the factors of production not effectively two but rather three in all. Labor and Capital represent human effort and deserve fair recompense. Land, however, is another matter. It is produced by no person's effort or responsibility. It is one of the things that are "just there," and whoever uses it may prevent others from doing so—thus making it imperative for a given society to agree on the rules of the use of land. Hence the many provisions of the Constitution practically redefining land ownership in the nature of stewardship.
The paramount rule should be for society to collect appropriate rent for the Land—and for all other natural resources—from those who "own" or command exclusive use of what is unquestionably common heritage. To date we have not yet passed any law that would tax away all or most of the "economic rent"—i.e. the rent that raw land or its resources would bring on the open market. We have not yet broken the bad habit of trying to tax human-made wealth instead of more ethically replacing such taxes with rent for "ownership" of what belongs to all, like land and natural resources, and whose value is, anyway, quite clearly, due to the existence of society and its activities. When we pass at last the laws adopting the law of economic rent, we shall more than afford to let it replace most existing taxes and still have more than enough of our wealth to spare for national development.
Immediate Measures
For the immediate, however, we social democrats from among farmers and farm workers of the Philippines and their allies hereby call for a stop to business as usual in the LAD aspect of the total agrarian reform program that would evidence a national tendency to throw good money after bad. How many so-called ARBs (agrarian reform beneficiaries) are there who only exist on paper but do not actually till the land, or who have received CLOAs (certificates of land ownership) without really knowing what the piece of paper is all about? Scarcity of land resource demands that the government conserve the same for the whole citizenry and for generations to come. Hence it is imperative for the government to secure, for the poor, equitable access to our common land resource
We reiterate that no one may appropriate the land to the prejudice or exclusion of the society and of generations to come. We should rather warmly welcome stewardship agreements founded on the consideration that beneficiaries will make them productive and will pay land value taxes as rents thereof.
We urge government to help beneficiaries consolidate small farm holdings to correct the negative impacts of land parceling. Consolidation may take the form of progressive integration of beneficiaries with farmers' collectives and cooperatives. These farmers' collectives and cooperatives shall carry on the management of the consolidated farms within their territory and pool available resources to ensure greater returns to owner-cultivators and sustained productivity. In this way responsibility for sustained increase in productivity becomes communal. In such a situation, individual cultivators will enjoy psychological security, knowing that they are not alone in confronting the manifold problems related to farming (cf. R.A. 6657, Chapter IX, Section 39). Preserving the communal nature of land and other natural resources will strongly promote greater and sustainable productivity.
We exhort the government to convert idle public lands suitable to agriculture into state farms, place these under the management and operation of farmers' cooperatives and associations, and invite in willing landless farmers, by way of "stewardship contracts" under terms and conditions that will ensure maximum returns to them, sustained productivity, and government revenues through lease rentals or in the form of the land value tax.
We call upon government to advance as much as feasible the stewardship system over agricultural lands. To this end the government shall conduct a thorough and conscientious audit of all CLOAs awarded. Such lands under CLOAs that are found to be in the possession of ARBs other than the original awardees shall be deemed to be of public domain, and will form part of lands for consolidation, cultivation and development within the stewardship system.
We ask government to give priority to farmers' and producers' cooperatives and associations as beneficiaries of the land consolidation program conditioned on non-parceling of these lands after distribution and their non-conversion to other uses by the beneficiaries.
We press government to support individual beneficiaries in the effective use of land, of modern technology, and of environment-friendly farm practices to ensure just returns and productivity. We urge it to speed up the consolidation of fragmented farms, with sufficient regard to the rights of owner-cultivators, and to ensure better access to infrastructures, technology, farm inputs and material, and financial assistance from public and private agencies.
We ask government to support the establishment of an Agricultural Marketing Service such as the one envisioned in the Agriculture and Fisheries Modernization Act (AFMA), taking into account the following reflections: that agricultural prosperity and food security are not merely about food production and productivity; that today they are more about post-production and the appropriate food marketing systems that relate to the basic and complex process of moving food and farm products from producer to consumer—quickly, efficiently, and with fairness to all.
In this connection, we urge the government to set up the requisite big post-harvest facilities of sufficient number and appropriately distributed location. These will be administered be farmers' cooperatives or corporations, and used by farmers upon payment of reasonable toll.
Finally, we hereby declare all agrarian reform beneficiaries' immediate and absolute freedom from amortization debts to the Land Bank of the Philippines. By historical logic and definition, the former tenants and leaseholders—the poor farmers as a class—have more than paid their dues to both landlord and State down the decades and down the centuries. We therefore link hands today firmly and rise to a new freedom—the freedom of the children of the soil who collectively own or cultivate the land and abide in life-giving harmony with it. We rise and shout: Advance authentic agrarian reform that achieves rural development and industrialization!
Partido Demokratiko Sosyalista ng Pilipinas
(Philippine Democratic Socialist Party)
30 December 2008
Saturday, February 21, 2009
Thursday, February 19, 2009
Social Democratic Proposition
SOCIAL DEMOCRATIC PROPOSITION
(January 2008)
A society in crisis
Our society is in the throes of a chronic crisis.
Poverty and lack of opportunities make life increasingly difficult for majority of our people. Many go hungry. Many do not have decent housing. Many do not have access to medical care when they are sick. Many struggle to send their children to school.
Aggregate economic growth in recent years has failed to ease up the situation. The so-called trickle down effect will be hard to come through because economic resources are in the hands of the few. The growth itself is fragile, deriving mainly from the remittances of the OFWs who are growing in number every year.
Grave and long-standing social problems are aggravating the plight of our people and dimming the prospects for uplifting their life. The quality of our education is deteriorating. The violence of rebel and terrorist groups is continuing. Unabated mining and logging are destroying our environment, depleting our natural resources and making our people more and more vulnerable to natural calamities.
Prolonged political crisis
A protracted political crisis is also gripping our country. For years now, our political leaders are locked in a stalemate in a continuing contest for power.
This political crisis is overshadowing, thus worsening, the social crisis. As our politicians bicker ceaselessly, no one is paying attention to the social crisis; no one is providing direction to the country.
Hounded by legitimacy issues and leadership credibility, the administration is extremely unpopular and continues to be very vulnerable to destabilization moves because of its unabated corruption scandals. Thus, it is concerned with fighting for its survival more than anything else. It is in paralysis and cannot govern effectively.
And yet the opposition fails to draw popular support to oust the present administration. Perhaps, people see that the opposition is not offering a real alternative to the present state of affairs. They know that the administration and the opposition are factions of the same political class that has failed to lead our country to progress. The opposition is just impatient in taking their turn on national leadership.
We are an unfortunate people because most of our politicians are decadent, corrupt and selfish. Corruption has permeated all branches of government, from the executive to the legislative bodies to the judiciary. The electoral body itself has become a bastion of corruption, a vehicle for cheating to keep one’s grip on power.
The greatest threat to our future as a people lies in our decadent political leaders. We certainly deserve better leaders in the future.
Revolutionary situation
In keeping away from the ongoing factional competition among our political leaders, our people appear to have become socially and politically apathetic. In truth, they are weary of the present social arrangements and they are disillusioned with our political system.
Our people partook in two people power revolts that led to leadership change and promised societal transformations. They now ask, how come there have been no substantial societal reforms? How come the same rotten political system that they want to get rid of remains, only worse? They have answers to why massive poverty is continuing. They have answers to why our country remains the sick man in this part of the world.
Our people are long crying for radical social changes.
Indeed, our society is in a revolutionary situation! Within the increasing segment of our people who seek radical changes there are armed groups which have the means to push their political and social agenda.
Though desirous of radical societal changes, our people reject totalitarian ideologies and violent undertakings. This is clear enough from their lack of support to the persistent Marxist-Leninist communist movement and to the reckless adventurism of messianic elements of the military.
Our people stand for democracy—that is without doubt. And yet they are fed up with the kind of democracy that we have had for many decades, and the anti-democratic forces are bent on taking advantage of our people’s frustrations and enforcing their own vision of change.
Democratic progressive forces are faced with two options. We can watch our political leaders and anti-democratic forces continue to destroy our democracy. Or we can come together and embark to save our democracy.
The crisis of liberal democracy
Our country has long been governed according to a liberal democratic system that we inherited from our colonial past. It must be that the social and political crises, which have brought us to the present revolutionary situation, have their roots in this system. Our social and political crises are products of the dysfunctions and bankruptcy of liberal democracy.
Liberal democracy is faulty because it stresses individual liberty, gives primacy to free markets and is content with formal democracy including formal equality before the law. It believes that leaving the individuals free to pursue their respective happiness will lead to the greatest good for the greatest number of people. It puts its faith in the markets and the ‘rule of law’ to bring about the good society. To the liberal democrats, states should interfere as little as possible in the lives of individuals and leave capitalism to its own devices.
The ills of liberalism and its unbridled capitalism became apparent in Europe even in the early period of industrialization. These ills include dramatic inequalities, massive poverty, social dislocation, social fragmentation and rampant individualism.
In our country where economic disparities are great, our liberal democracy has led to the wealthy few making the democratic processes, including the legal system and the entire political system, their tools in promoting and safeguarding their economic and political interests.
Liberal democracy created our decadent political system that is characterized by lack of authentic politics and the dominance of opportunistic and selfish politicians. Corruption and inefficiency are two of the worst ills of this political system. This political system is captive to the wealthy few who direct the decisions of the state away from the pursuit of the common good and toward favoring their selfish interests. In this system, our political leaders and the wealthy few prevent the emergence of an autonomous and sufficiently strong developmentalist state.
Our peculiar brand of liberal democracy is also responsible for our backward economy that keeps many of our people impoverished, without means to live decently. Content with the profits they extract from export agriculture based on feudal or backward agrarian capitalist land tenure of from other primary industries like logging and mining, our wealthy few and political leaders failed to pursue genuine industrialization as there was no incentive for them to do so. They also blocked agrarian reform, thus stunting the growth of the domestic market for the products of industry. Our liberal democracy engendered bureaucrat and monopoly capitalism that has kept our economy backward and uncompetitive.
Liberal democracy brings freedom and the greatest good for the few in our society while majority of our people languish in poverty and powerlessness. Individualism and inequalities prevent liberal democracy from becoming democracy for all.
Our people are tired of this kind of democracy. As clear as they stand for democracy, they desire a movement away from democracy that is real only for the few.
The social democratic alternative
In the face of our present situation, we invite you to present to consider our alternative to the existing social regime.
Social democracy is our alternative to liberalism.
Champions. Many consider social democracy as the most successful ideology and movement of the 20th century, crediting the application of its values and principles for the most prosperous and harmonious period in European history. Political parties and leaders who champion or subscribe to social democracy have built some of the most progressive and livable societies in the world, including Sweden, Denmark, Norway, Finland, Germany, France, Spain, Canada, Australia and, close to home, Singapore. The successes of social democracy in these societies provide inspiration and hope in the possibility of a better future for our own society.
Objective. The goal of social democracy is to make democracy work for and be meaningful to all by building an affluent society that cares for all of its members and leaves no one. A society founded on social democracy secures the dignity of everyone and provides each one the opportunities to live a good life. Because everyone is cared for, everyone has a stake in the future of this society and this society is cohesive and strong.
Core values. Social democrats believe that such a society is built on the values of freedom, justice and solidarity.
Freedom means the possibility of taking charge of one’s own life and realizing one’s highest potentials. It is based on human dignity and it requires securing the universal basic human rights of the individuals. At the very least, it is society’s responsibility to ensure that every person has the minimum requirements to live in dignity and in freedom. Individual freedom, however, is not absolute. It ends where it impairs the freedom or violates the human rights of others.
Equality refers to the recognition of equal dignity of all persons, regardless of gender, color or beliefs. Another name for this is social justice. Formal equality is not enough. Everyone having the capacity to assert his or her rights is more important. Equality requires society to provide equal freedom and equal chances in life to every person. It calls for fair distribution of property, income and power. It also demands the rejection of any form of discrimination.
Solidarity is the premise that we are here for each other. We shape our lives in one community. We can only have equal freedom and equal chances in life by guaranteeing each other’s rights and looking after each other. We can only improve our society by working together for the common good. Solidarity finds expression in the Filipinos’ “bayanihan spirit” in times of common adversity. It is also expressed in the strong sense of patriotism that banded Filipinos against common enemies in the past or for a great undertaking like the display of people power on EDSA in 1986 and 2001.
Principles and paths. Social democracy asserts the ‘primacy of politics and social cooperation.’ Its vision of society will be achieved through the collective struggle of human beings united by common commitment to the social democratic values.
Though born in response to the ills of unrestrained capitalism, social democracy recognizes the ability of the market to create wealth upon which the good society can be built. Thus, it is committed to acquisition of political power to harness the powers of market forces in the service of the common good, while at the same time protecting the citizenry from their destructive effects. Social democracy asserts social control, through the state, over market forces.
In a social democratic society, the state does not only manage market forces for the common good, it also takes the role of members of families and local communities in pre-capitalist times—that of taking care of people when they could not help themselves. Social democratic government strives to guarantee the basic subsistence of every citizen rather than leaving him or her to his position in the market place. At the very least, social democratic societies ensure fair chances in life to everyone.
Among the core policies and programs that social democrats work for are full employment, universal access to quality education, adequate health care, social security in old age and contingency situations, possibly including unemployment, progressive taxation and redistributive programs.
The implementation of social democracy calls for a state that is strong, patriotic and developmentalist. It requires that the state be liberated from those who possess wealth or those who work for their interests rather than for the common good. It also calls for a state enjoying the support of a patriotic, organized and clearly democratic citizenry.
Social democrats are committed to acquiring political power the way they intend to govern—in partnership with the organized democratic progressive elements of the basic sectors and key guardians of Philippine democracy.
(January 2008)
A society in crisis
Our society is in the throes of a chronic crisis.
Poverty and lack of opportunities make life increasingly difficult for majority of our people. Many go hungry. Many do not have decent housing. Many do not have access to medical care when they are sick. Many struggle to send their children to school.
Aggregate economic growth in recent years has failed to ease up the situation. The so-called trickle down effect will be hard to come through because economic resources are in the hands of the few. The growth itself is fragile, deriving mainly from the remittances of the OFWs who are growing in number every year.
Grave and long-standing social problems are aggravating the plight of our people and dimming the prospects for uplifting their life. The quality of our education is deteriorating. The violence of rebel and terrorist groups is continuing. Unabated mining and logging are destroying our environment, depleting our natural resources and making our people more and more vulnerable to natural calamities.
Prolonged political crisis
A protracted political crisis is also gripping our country. For years now, our political leaders are locked in a stalemate in a continuing contest for power.
This political crisis is overshadowing, thus worsening, the social crisis. As our politicians bicker ceaselessly, no one is paying attention to the social crisis; no one is providing direction to the country.
Hounded by legitimacy issues and leadership credibility, the administration is extremely unpopular and continues to be very vulnerable to destabilization moves because of its unabated corruption scandals. Thus, it is concerned with fighting for its survival more than anything else. It is in paralysis and cannot govern effectively.
And yet the opposition fails to draw popular support to oust the present administration. Perhaps, people see that the opposition is not offering a real alternative to the present state of affairs. They know that the administration and the opposition are factions of the same political class that has failed to lead our country to progress. The opposition is just impatient in taking their turn on national leadership.
We are an unfortunate people because most of our politicians are decadent, corrupt and selfish. Corruption has permeated all branches of government, from the executive to the legislative bodies to the judiciary. The electoral body itself has become a bastion of corruption, a vehicle for cheating to keep one’s grip on power.
The greatest threat to our future as a people lies in our decadent political leaders. We certainly deserve better leaders in the future.
Revolutionary situation
In keeping away from the ongoing factional competition among our political leaders, our people appear to have become socially and politically apathetic. In truth, they are weary of the present social arrangements and they are disillusioned with our political system.
Our people partook in two people power revolts that led to leadership change and promised societal transformations. They now ask, how come there have been no substantial societal reforms? How come the same rotten political system that they want to get rid of remains, only worse? They have answers to why massive poverty is continuing. They have answers to why our country remains the sick man in this part of the world.
Our people are long crying for radical social changes.
Indeed, our society is in a revolutionary situation! Within the increasing segment of our people who seek radical changes there are armed groups which have the means to push their political and social agenda.
Though desirous of radical societal changes, our people reject totalitarian ideologies and violent undertakings. This is clear enough from their lack of support to the persistent Marxist-Leninist communist movement and to the reckless adventurism of messianic elements of the military.
Our people stand for democracy—that is without doubt. And yet they are fed up with the kind of democracy that we have had for many decades, and the anti-democratic forces are bent on taking advantage of our people’s frustrations and enforcing their own vision of change.
Democratic progressive forces are faced with two options. We can watch our political leaders and anti-democratic forces continue to destroy our democracy. Or we can come together and embark to save our democracy.
The crisis of liberal democracy
Our country has long been governed according to a liberal democratic system that we inherited from our colonial past. It must be that the social and political crises, which have brought us to the present revolutionary situation, have their roots in this system. Our social and political crises are products of the dysfunctions and bankruptcy of liberal democracy.
Liberal democracy is faulty because it stresses individual liberty, gives primacy to free markets and is content with formal democracy including formal equality before the law. It believes that leaving the individuals free to pursue their respective happiness will lead to the greatest good for the greatest number of people. It puts its faith in the markets and the ‘rule of law’ to bring about the good society. To the liberal democrats, states should interfere as little as possible in the lives of individuals and leave capitalism to its own devices.
The ills of liberalism and its unbridled capitalism became apparent in Europe even in the early period of industrialization. These ills include dramatic inequalities, massive poverty, social dislocation, social fragmentation and rampant individualism.
In our country where economic disparities are great, our liberal democracy has led to the wealthy few making the democratic processes, including the legal system and the entire political system, their tools in promoting and safeguarding their economic and political interests.
Liberal democracy created our decadent political system that is characterized by lack of authentic politics and the dominance of opportunistic and selfish politicians. Corruption and inefficiency are two of the worst ills of this political system. This political system is captive to the wealthy few who direct the decisions of the state away from the pursuit of the common good and toward favoring their selfish interests. In this system, our political leaders and the wealthy few prevent the emergence of an autonomous and sufficiently strong developmentalist state.
Our peculiar brand of liberal democracy is also responsible for our backward economy that keeps many of our people impoverished, without means to live decently. Content with the profits they extract from export agriculture based on feudal or backward agrarian capitalist land tenure of from other primary industries like logging and mining, our wealthy few and political leaders failed to pursue genuine industrialization as there was no incentive for them to do so. They also blocked agrarian reform, thus stunting the growth of the domestic market for the products of industry. Our liberal democracy engendered bureaucrat and monopoly capitalism that has kept our economy backward and uncompetitive.
Liberal democracy brings freedom and the greatest good for the few in our society while majority of our people languish in poverty and powerlessness. Individualism and inequalities prevent liberal democracy from becoming democracy for all.
Our people are tired of this kind of democracy. As clear as they stand for democracy, they desire a movement away from democracy that is real only for the few.
The social democratic alternative
In the face of our present situation, we invite you to present to consider our alternative to the existing social regime.
Social democracy is our alternative to liberalism.
Champions. Many consider social democracy as the most successful ideology and movement of the 20th century, crediting the application of its values and principles for the most prosperous and harmonious period in European history. Political parties and leaders who champion or subscribe to social democracy have built some of the most progressive and livable societies in the world, including Sweden, Denmark, Norway, Finland, Germany, France, Spain, Canada, Australia and, close to home, Singapore. The successes of social democracy in these societies provide inspiration and hope in the possibility of a better future for our own society.
Objective. The goal of social democracy is to make democracy work for and be meaningful to all by building an affluent society that cares for all of its members and leaves no one. A society founded on social democracy secures the dignity of everyone and provides each one the opportunities to live a good life. Because everyone is cared for, everyone has a stake in the future of this society and this society is cohesive and strong.
Core values. Social democrats believe that such a society is built on the values of freedom, justice and solidarity.
Freedom means the possibility of taking charge of one’s own life and realizing one’s highest potentials. It is based on human dignity and it requires securing the universal basic human rights of the individuals. At the very least, it is society’s responsibility to ensure that every person has the minimum requirements to live in dignity and in freedom. Individual freedom, however, is not absolute. It ends where it impairs the freedom or violates the human rights of others.
Equality refers to the recognition of equal dignity of all persons, regardless of gender, color or beliefs. Another name for this is social justice. Formal equality is not enough. Everyone having the capacity to assert his or her rights is more important. Equality requires society to provide equal freedom and equal chances in life to every person. It calls for fair distribution of property, income and power. It also demands the rejection of any form of discrimination.
Solidarity is the premise that we are here for each other. We shape our lives in one community. We can only have equal freedom and equal chances in life by guaranteeing each other’s rights and looking after each other. We can only improve our society by working together for the common good. Solidarity finds expression in the Filipinos’ “bayanihan spirit” in times of common adversity. It is also expressed in the strong sense of patriotism that banded Filipinos against common enemies in the past or for a great undertaking like the display of people power on EDSA in 1986 and 2001.
Principles and paths. Social democracy asserts the ‘primacy of politics and social cooperation.’ Its vision of society will be achieved through the collective struggle of human beings united by common commitment to the social democratic values.
Though born in response to the ills of unrestrained capitalism, social democracy recognizes the ability of the market to create wealth upon which the good society can be built. Thus, it is committed to acquisition of political power to harness the powers of market forces in the service of the common good, while at the same time protecting the citizenry from their destructive effects. Social democracy asserts social control, through the state, over market forces.
In a social democratic society, the state does not only manage market forces for the common good, it also takes the role of members of families and local communities in pre-capitalist times—that of taking care of people when they could not help themselves. Social democratic government strives to guarantee the basic subsistence of every citizen rather than leaving him or her to his position in the market place. At the very least, social democratic societies ensure fair chances in life to everyone.
Among the core policies and programs that social democrats work for are full employment, universal access to quality education, adequate health care, social security in old age and contingency situations, possibly including unemployment, progressive taxation and redistributive programs.
The implementation of social democracy calls for a state that is strong, patriotic and developmentalist. It requires that the state be liberated from those who possess wealth or those who work for their interests rather than for the common good. It also calls for a state enjoying the support of a patriotic, organized and clearly democratic citizenry.
Social democrats are committed to acquiring political power the way they intend to govern—in partnership with the organized democratic progressive elements of the basic sectors and key guardians of Philippine democracy.
Wednesday, February 18, 2009
Towards Social Democracy
Towards social democracy
Saturday, May 03, 2008
Now that a transition to democracy has taken place, we need to start preparing for the next step forward: a progressive, enlightened and humane society. It is possible for societies afflicted by widespread poverty and squalor to surmount their dreary and dismal conditions without going to war and looting other countries. Through hard work, dedicated leadership and intelligent policies and planning spectacular success can be achieved.
I am particularly thinking of Sweden, where I lived for nearly 35 years, and Singapore, where I am currently based, as examples of successful transformation from sprawling poverty to enviable standards of living.
At the beginning of the 19th century, Sweden was one of the poorest nations, in the farthest corner of northern Europe. So poor was it that nearly half its population migrated to the United States. Today this nation of some nine million is a global leader in high-tech industries and the service sector, and its Volvo and Saab vehicles are world-renowned. It is also the fairest society on earth when it comes to the basic needs for a secure and dignified life. When Singapore became independent in 1965, it was infested with Chinese secret societies that ran gambling dens, brothels and the drugs trade.
Today this nation of barely 4.5 million is the 17th richest in the world. It provides excellent services and facilities for trade and commerce, having initially made its mark in high-tech manufacturing and industrial production. In both these countries a strong political party -- the Sveriges Socialdemokratiska Arbetareparti (Swedish Social Democratic Workers' Party) and the People's Action Party, respectively -- led the nation forward and used state power to create conditions for economic growth and rising standards of living.
Swedish social democracy has historically been more attuned to egalitarian reforms, while in Singapore the change from erstwhile Fabian socialism to free-market principles has not meant that the state has abdicated its duty to provide cheap and good housing to citizens, excellent education and vocational training and an extremely safe and secure social milieu free from violent crime and drugs. As its economy grows, Singapore is expanding subsidised healthcare facilities for those who really need help.
Historically, social democracy was a democratic tendency within the broad socialist movement that emerged in 19th-century western Europe that, in contrast to orthodox Marxism-Leninism's theory of armed revolution and one-party rule, believed in free elections and an open society.
Equally, in contrast to liberal democracy's celebration of unbridled laissez-faire capitalism and human egotism, social democracy always believed in a strong and active state with a strong social policy as a complement to the human need for solidarity and sympathy. The question now is: how should Pakistan be transformed into a social democratic polity? There is no denying that we need a party that can organise mass support behind a social democratic programme for change and transformation. The PPP would probably come closest to the description of a social democratic party. The late Ms Bhutto had revived the original PPP commitment to roti, kapra aur makan (food, clothing and shelter).
However, it is not clear to what extent this goal is still dear to her successors. Another problem is that a social democratic party must rely primarily on the working people and intellectuals, while the PPP is dominated by landlords and other conservative sections of society, especially in Sindh.On the other hand, the PML-N corresponds more to a liberal democratic type of party but only in economic terms of a free market. After all, liberal democracy is not only about free capitalism: it is also committed strongly to the freedom of religion and conscience, thought and opinion. Historically Nawaz Sharif has a bad record on these emancipatory aspects of liberal democracy.
Under the circumstances, one can either work towards a new party of the working people and concerned intellectuals, which holds regular elections not only at the level of state and government but also within the party or, more preferably, begin a concerted and focused campaign to propagate social democratic ideals and principles. In the longer run, if the need for establishing a new party gains wide support then one can move towards that goal.
In this regard, it is important that we initially imitate the Singapore model instead of the Swedish one, because without economic growth and wealth egalitarian reforms become hollow and are reduced merely to slogans. Ownership of private property should be given proper legal coverage, let trade and commerce flourish and people encouraged to set up businesses. But the taxation system should be structured in a way that those who use the facilities of the state -- its laws, rules and regulations, bureaucratic machinery, international contacts and facilities and other such services -- pay more tax than those who do not. In such a tax regime notorious political-industrial families and other scoundrels would have no chance of tax evasion and there will be no room for contrived defaulters of bank loans. Also, the vast economic holdings and interests of the military should be brought under the jurisdiction of our tax system. On the other hand, spending on better education and vocational training would be considered an investment rather than a favour to the poor.
We need to encourage the growth of a culture of meritocracy, but with provisions for the poor and historically-disadvantaged to get out of the rut of crushing poverty and move forward. A two-pronged developmental strategy is needed that puts a high premium on hard work and talent while simultaneously developing a level playing field by undermining structures which sustain parasitical landlords and tribal chiefs.
The state must ensure the following minimum to all people: clean drinking water, a functioning sanitation system including proper toilets, reasonable housing and a basic health system and transparent government. Indeed, philanthropy and charity will have a major role to play to make Pakistan a fair and caring society, but overall societal management must rest with the state and the elected representatives of the people.
The writer is a professor of political science and a visiting senior research fellow at the Institute of South Asian Studies (ISAS), National University of Singapore. Email: isasia@nus.edu.sg
Saturday, May 03, 2008
Now that a transition to democracy has taken place, we need to start preparing for the next step forward: a progressive, enlightened and humane society. It is possible for societies afflicted by widespread poverty and squalor to surmount their dreary and dismal conditions without going to war and looting other countries. Through hard work, dedicated leadership and intelligent policies and planning spectacular success can be achieved.
I am particularly thinking of Sweden, where I lived for nearly 35 years, and Singapore, where I am currently based, as examples of successful transformation from sprawling poverty to enviable standards of living.
At the beginning of the 19th century, Sweden was one of the poorest nations, in the farthest corner of northern Europe. So poor was it that nearly half its population migrated to the United States. Today this nation of some nine million is a global leader in high-tech industries and the service sector, and its Volvo and Saab vehicles are world-renowned. It is also the fairest society on earth when it comes to the basic needs for a secure and dignified life. When Singapore became independent in 1965, it was infested with Chinese secret societies that ran gambling dens, brothels and the drugs trade.
Today this nation of barely 4.5 million is the 17th richest in the world. It provides excellent services and facilities for trade and commerce, having initially made its mark in high-tech manufacturing and industrial production. In both these countries a strong political party -- the Sveriges Socialdemokratiska Arbetareparti (Swedish Social Democratic Workers' Party) and the People's Action Party, respectively -- led the nation forward and used state power to create conditions for economic growth and rising standards of living.
Swedish social democracy has historically been more attuned to egalitarian reforms, while in Singapore the change from erstwhile Fabian socialism to free-market principles has not meant that the state has abdicated its duty to provide cheap and good housing to citizens, excellent education and vocational training and an extremely safe and secure social milieu free from violent crime and drugs. As its economy grows, Singapore is expanding subsidised healthcare facilities for those who really need help.
Historically, social democracy was a democratic tendency within the broad socialist movement that emerged in 19th-century western Europe that, in contrast to orthodox Marxism-Leninism's theory of armed revolution and one-party rule, believed in free elections and an open society.
Equally, in contrast to liberal democracy's celebration of unbridled laissez-faire capitalism and human egotism, social democracy always believed in a strong and active state with a strong social policy as a complement to the human need for solidarity and sympathy. The question now is: how should Pakistan be transformed into a social democratic polity? There is no denying that we need a party that can organise mass support behind a social democratic programme for change and transformation. The PPP would probably come closest to the description of a social democratic party. The late Ms Bhutto had revived the original PPP commitment to roti, kapra aur makan (food, clothing and shelter).
However, it is not clear to what extent this goal is still dear to her successors. Another problem is that a social democratic party must rely primarily on the working people and intellectuals, while the PPP is dominated by landlords and other conservative sections of society, especially in Sindh.On the other hand, the PML-N corresponds more to a liberal democratic type of party but only in economic terms of a free market. After all, liberal democracy is not only about free capitalism: it is also committed strongly to the freedom of religion and conscience, thought and opinion. Historically Nawaz Sharif has a bad record on these emancipatory aspects of liberal democracy.
Under the circumstances, one can either work towards a new party of the working people and concerned intellectuals, which holds regular elections not only at the level of state and government but also within the party or, more preferably, begin a concerted and focused campaign to propagate social democratic ideals and principles. In the longer run, if the need for establishing a new party gains wide support then one can move towards that goal.
In this regard, it is important that we initially imitate the Singapore model instead of the Swedish one, because without economic growth and wealth egalitarian reforms become hollow and are reduced merely to slogans. Ownership of private property should be given proper legal coverage, let trade and commerce flourish and people encouraged to set up businesses. But the taxation system should be structured in a way that those who use the facilities of the state -- its laws, rules and regulations, bureaucratic machinery, international contacts and facilities and other such services -- pay more tax than those who do not. In such a tax regime notorious political-industrial families and other scoundrels would have no chance of tax evasion and there will be no room for contrived defaulters of bank loans. Also, the vast economic holdings and interests of the military should be brought under the jurisdiction of our tax system. On the other hand, spending on better education and vocational training would be considered an investment rather than a favour to the poor.
We need to encourage the growth of a culture of meritocracy, but with provisions for the poor and historically-disadvantaged to get out of the rut of crushing poverty and move forward. A two-pronged developmental strategy is needed that puts a high premium on hard work and talent while simultaneously developing a level playing field by undermining structures which sustain parasitical landlords and tribal chiefs.
The state must ensure the following minimum to all people: clean drinking water, a functioning sanitation system including proper toilets, reasonable housing and a basic health system and transparent government. Indeed, philanthropy and charity will have a major role to play to make Pakistan a fair and caring society, but overall societal management must rest with the state and the elected representatives of the people.
The writer is a professor of political science and a visiting senior research fellow at the Institute of South Asian Studies (ISAS), National University of Singapore. Email: isasia@nus.edu.sg
Tuesday, February 17, 2009
Social Democracy for the Philippines Today
Social democracy for the Philippines today
24 September 2008
We need a change of system,
not just a change of leaders.
It is time for social democracy.
These past four years has seen an unending series of scandals involving all branches of government and politicians of both the administration and the opposition. At the same time, many politicians have revealed their opportunism evident in their collaboration with armed extremists and their war-inducing vilification of government efforts to arrive at a satisfactory peace agreement with predominantly Muslim insurgent groups. These are actually the latest and relatively severe symptoms of the decay of a liberal democracy dominated by traditional politicians. They manifest the ripening of the evils of liberal democracy in a pre-existing situation of grave social inequality.
Liberal democracy, while theoretically promoting formal equality under the law, does not promote equal social power, so that the already powerful gain all the more power, because they have the economic and intellectual means and social connections to use the law to their own advantage.
Liberal democracy in the Philippines amounts to “elite politics:” the participation of and advantage to the economically wealthy and socially prominent families and individuals or their media allies.
In this dysfunctional liberal democratic dispensation, we now see laid bare before our eyes the ascendancy of arrogant and manipulative media at the service of vested interests.
We are outraged at how prone traditional politicians are to ally with anti-democratic elements of the Marxist-Leninist extreme Left and the fascist extreme Right, for their own selfish agenda, and how eager they are to ride on the ignorance of the public to acquire an undeserved popularity by misrepresenting and maligning government efforts to arrive at a reasonable peace agreement with predominantly Muslim insurgent groups. All this at the cost of the lives and the bodily integrity of our soldiers, police officers, and patriotic public officials and ordinary citizens, and severe suffering for hundreds of thousands of evacuees and other displaced persons.
We grieve at the breakdown of our basic securities as a nation—defense, internal security, food, water, energy, environment.
We gaze with alarm at the decline in livelihood, education, health, security, peace and order, the increase of poverty in absolute terms, the sense of hopelessness of many of our people, after two People Power uprisings rendered useless by the nefarious ways of traditional politicians acting within the framework of liberal democracy.
It is indeed time for change.
It is time for social democracy.
It is time for social democracy—a society in which formal equality under the law is made life-giving by the promotion of real equality in social power, so that all citizens can participate on equal terms in the burdens, benefits and governance of societal life.
It is time for social democracy—a society with sufficient participation in if not control of governance by the majority of our nation, composed of the working masses of farmers, fisherfolk, industrial labor, small businesspersons and professionals, and ministers of the faith communities.
Social democracy strives for a society ably defended and nurtured by the pillars of democracy—democratic political and civic organizations and social movements, the Christian Churches, the Muslim community, the military, the police, academe, business, and responsible media.
Social democracy promotes a society whose leaders and citizens effectively safeguard and promote, with their lives, their honor, and their intellectual endowments and material possessions, our basic securities as a nation—defense, internal security, food, water, energy, environment.
Social democrats, by their theory and practice, help provide a model for a society that clearly and militantly combats anti-democratic elements by a spirit and with measures that are committed to human rights and international humanitarian law.
Social democrats build a society that is able to give its youth the means to achieve a happy and prosperous future.
Social democrats methodically construct a society that cares equally for all.
In the Philippines, what specific principles and programs do social democrats advocate in order to make social democracy a reality in our country?
Philippine social democrats advocate specific models for the liberating transformation of the main systems of society—the economy, politics, and culture:
§ a socially equitable and sustainable market economy
§ socially equitable by appropriate government intervention to protect and improve the income, safety, health, and welfare of the citizens, especially the working people
§ sustainable by safeguards for the integrity and health of the natural environment
§ a participative and formative democracy
§ through substantial participation of the citizens in social discussion and governance
§ through systematic formation of the citizenry in the values, knowledge and skills for effectively engaging in civil life and public affairs
§ an authentically humanist culture
§ interfaith in basis
§ formally expressed in civil ethics
§ favourable to moral renewal through work for the common good and the promotion of virtues—personal, domestic and civic—especially patriotism, honesty, and diligence
Philippine social democrats call on all fellow citizens to join in specific tasks for nation-building. Some of the more important of these tasks can be grouped as follows:
(1) renewing and strengthening the state
(2) effecting fundamental reforms in the political system and the structure of government
(3) promoting our basic securities as a nation—defense, internal security, food, water, energy, environment
(4) alleviating and eventually eliminating poverty
Renewing and strengthening the state entails the following:
§ struggling against corruption in the executive branch, the legislature, the judiciary, and the constitutional commissions, through external legal and administrative deterrents and internal reform initiatives
§ rooting out inefficiency by facilitating the early retirement of inefficient government staff and the recruitment of efficient ones through adequate monetary and other compensation
§ remedying the lack of revenues by progressive taxation and by conscientious collection of taxes
The urgent political reforms include
§ electoral reform: drastic cleaning up and restructuring of the Commission on Elections, appropriate automation of the electoral process
§ governmental reform: shift to unicameral parliamentary system
§ reform of the bureaucracy: professionalization of the bureaucracy through attrition of the incompetent and inefficient and promotion and recruitment of the skilled and efficient
Promoting our basic securities as a nation entails
§ building up the defense and internal security capability of the Armed Forces of the Philippines (AFP), in large part through the vigorous promotion of a domestic defense industry
§ bringing up to standards the capacity of the Philippine National Police (PNP) and related public safety institutions to protect and promote law enforcement and public safety and order
§ resolutely carrying out the Enhanced National Internal Security Plan (ENISP), with its five offensives and three programs
§ identifying, wisely using, and renewing or conserving our strategic plant, animal, soil, aquatic, mineral, and energy reserves
Alleviating and eventually eliminating poverty involves providing the citizenry with providing dignified and well-remunerated livelihood, improving their health, and giving them access to quality education.
The following are necessary to provide the citizenry with dignified and well-remunerated livelihood:
§ appropriate agrarian reform and rural development through industrialization
§ balanced economic development: agriculture, manufacturing, services;
§ rural and urban industrialization
§ encourage and assist in the establishment and operation of worker-owned enterprises in multiplier industries and programs, such as the following
§ housing, especially for the urban and rural poor and the lower middle class
§ infrastructure and equipment for transportation, especially rail transport
§ agro-industry, especially coconut-based multiproduct industrial facilities
§ massive effort to set up adequate infrastructure
§ technical help for production, postproduction, marketing, research
Improving the health of the citizenry entails the improving health programs and facilities directed to the following priorities:
§ sanitation and public health: safe water, nutrition, vaccination, health education
§ adequate network of facilities for health care, especially primary and secondary facilities
§ values-based responsible parenthood
§ adequate shelter
Giving the citizenry access to quality education involves the following:
§ appropriate programs, textbooks, and teaching aids, especially for literacy, numeracy, science, and civics
§ rapidly overcoming the deficit in school buildings, classrooms and laboratories
§ massive program in teacher training, especially in English, mathematics, science, and civics
These urgent objectives can best be realized with a government based on the principles and practices of social democracy.
It is time for social democracy.
It is time for social democracy in the Philippines.
Itatag ang lipunang pantay ang paglingap sa lahat !
Itatag ang sanlipunang demokrasya !
24 September 2008
We need a change of system,
not just a change of leaders.
It is time for social democracy.
These past four years has seen an unending series of scandals involving all branches of government and politicians of both the administration and the opposition. At the same time, many politicians have revealed their opportunism evident in their collaboration with armed extremists and their war-inducing vilification of government efforts to arrive at a satisfactory peace agreement with predominantly Muslim insurgent groups. These are actually the latest and relatively severe symptoms of the decay of a liberal democracy dominated by traditional politicians. They manifest the ripening of the evils of liberal democracy in a pre-existing situation of grave social inequality.
Liberal democracy, while theoretically promoting formal equality under the law, does not promote equal social power, so that the already powerful gain all the more power, because they have the economic and intellectual means and social connections to use the law to their own advantage.
Liberal democracy in the Philippines amounts to “elite politics:” the participation of and advantage to the economically wealthy and socially prominent families and individuals or their media allies.
In this dysfunctional liberal democratic dispensation, we now see laid bare before our eyes the ascendancy of arrogant and manipulative media at the service of vested interests.
We are outraged at how prone traditional politicians are to ally with anti-democratic elements of the Marxist-Leninist extreme Left and the fascist extreme Right, for their own selfish agenda, and how eager they are to ride on the ignorance of the public to acquire an undeserved popularity by misrepresenting and maligning government efforts to arrive at a reasonable peace agreement with predominantly Muslim insurgent groups. All this at the cost of the lives and the bodily integrity of our soldiers, police officers, and patriotic public officials and ordinary citizens, and severe suffering for hundreds of thousands of evacuees and other displaced persons.
We grieve at the breakdown of our basic securities as a nation—defense, internal security, food, water, energy, environment.
We gaze with alarm at the decline in livelihood, education, health, security, peace and order, the increase of poverty in absolute terms, the sense of hopelessness of many of our people, after two People Power uprisings rendered useless by the nefarious ways of traditional politicians acting within the framework of liberal democracy.
It is indeed time for change.
It is time for social democracy.
It is time for social democracy—a society in which formal equality under the law is made life-giving by the promotion of real equality in social power, so that all citizens can participate on equal terms in the burdens, benefits and governance of societal life.
It is time for social democracy—a society with sufficient participation in if not control of governance by the majority of our nation, composed of the working masses of farmers, fisherfolk, industrial labor, small businesspersons and professionals, and ministers of the faith communities.
Social democracy strives for a society ably defended and nurtured by the pillars of democracy—democratic political and civic organizations and social movements, the Christian Churches, the Muslim community, the military, the police, academe, business, and responsible media.
Social democracy promotes a society whose leaders and citizens effectively safeguard and promote, with their lives, their honor, and their intellectual endowments and material possessions, our basic securities as a nation—defense, internal security, food, water, energy, environment.
Social democrats, by their theory and practice, help provide a model for a society that clearly and militantly combats anti-democratic elements by a spirit and with measures that are committed to human rights and international humanitarian law.
Social democrats build a society that is able to give its youth the means to achieve a happy and prosperous future.
Social democrats methodically construct a society that cares equally for all.
In the Philippines, what specific principles and programs do social democrats advocate in order to make social democracy a reality in our country?
Philippine social democrats advocate specific models for the liberating transformation of the main systems of society—the economy, politics, and culture:
§ a socially equitable and sustainable market economy
§ socially equitable by appropriate government intervention to protect and improve the income, safety, health, and welfare of the citizens, especially the working people
§ sustainable by safeguards for the integrity and health of the natural environment
§ a participative and formative democracy
§ through substantial participation of the citizens in social discussion and governance
§ through systematic formation of the citizenry in the values, knowledge and skills for effectively engaging in civil life and public affairs
§ an authentically humanist culture
§ interfaith in basis
§ formally expressed in civil ethics
§ favourable to moral renewal through work for the common good and the promotion of virtues—personal, domestic and civic—especially patriotism, honesty, and diligence
Philippine social democrats call on all fellow citizens to join in specific tasks for nation-building. Some of the more important of these tasks can be grouped as follows:
(1) renewing and strengthening the state
(2) effecting fundamental reforms in the political system and the structure of government
(3) promoting our basic securities as a nation—defense, internal security, food, water, energy, environment
(4) alleviating and eventually eliminating poverty
Renewing and strengthening the state entails the following:
§ struggling against corruption in the executive branch, the legislature, the judiciary, and the constitutional commissions, through external legal and administrative deterrents and internal reform initiatives
§ rooting out inefficiency by facilitating the early retirement of inefficient government staff and the recruitment of efficient ones through adequate monetary and other compensation
§ remedying the lack of revenues by progressive taxation and by conscientious collection of taxes
The urgent political reforms include
§ electoral reform: drastic cleaning up and restructuring of the Commission on Elections, appropriate automation of the electoral process
§ governmental reform: shift to unicameral parliamentary system
§ reform of the bureaucracy: professionalization of the bureaucracy through attrition of the incompetent and inefficient and promotion and recruitment of the skilled and efficient
Promoting our basic securities as a nation entails
§ building up the defense and internal security capability of the Armed Forces of the Philippines (AFP), in large part through the vigorous promotion of a domestic defense industry
§ bringing up to standards the capacity of the Philippine National Police (PNP) and related public safety institutions to protect and promote law enforcement and public safety and order
§ resolutely carrying out the Enhanced National Internal Security Plan (ENISP), with its five offensives and three programs
§ identifying, wisely using, and renewing or conserving our strategic plant, animal, soil, aquatic, mineral, and energy reserves
Alleviating and eventually eliminating poverty involves providing the citizenry with providing dignified and well-remunerated livelihood, improving their health, and giving them access to quality education.
The following are necessary to provide the citizenry with dignified and well-remunerated livelihood:
§ appropriate agrarian reform and rural development through industrialization
§ balanced economic development: agriculture, manufacturing, services;
§ rural and urban industrialization
§ encourage and assist in the establishment and operation of worker-owned enterprises in multiplier industries and programs, such as the following
§ housing, especially for the urban and rural poor and the lower middle class
§ infrastructure and equipment for transportation, especially rail transport
§ agro-industry, especially coconut-based multiproduct industrial facilities
§ massive effort to set up adequate infrastructure
§ technical help for production, postproduction, marketing, research
Improving the health of the citizenry entails the improving health programs and facilities directed to the following priorities:
§ sanitation and public health: safe water, nutrition, vaccination, health education
§ adequate network of facilities for health care, especially primary and secondary facilities
§ values-based responsible parenthood
§ adequate shelter
Giving the citizenry access to quality education involves the following:
§ appropriate programs, textbooks, and teaching aids, especially for literacy, numeracy, science, and civics
§ rapidly overcoming the deficit in school buildings, classrooms and laboratories
§ massive program in teacher training, especially in English, mathematics, science, and civics
These urgent objectives can best be realized with a government based on the principles and practices of social democracy.
It is time for social democracy.
It is time for social democracy in the Philippines.
Itatag ang lipunang pantay ang paglingap sa lahat !
Itatag ang sanlipunang demokrasya !
Monday, February 16, 2009
Remembering Olof Palme, A Social Democrat
Feb 28, 2006 at 02:04 o\clock
Twenty years ago today: the assassination of Olof Palme
by: socialdemocracynow
Today, February 28, 2006, social democrats all over the world mourn the assassination of Olof Palme, the last of the great Swedish social democrats and probably the last real social democrat ever to hold the top job in any country until the unexpected and still astonishing rise of Hugo Chavez in Venezuela.Do we know who murdered Palme? Perhaps we do. A petty criminal and longtime drug abuser, Christer Petterson, who died in 2004, confessed to the murder in 2001. He was identified as the assassin by Palme's wife, Lisbet, who was herself shot during the attack. Then, on February 24, 2006, Pettersson's close friend Roger Östlund claimed on his death bed that he had actually seen Pettersson shoot Olof Palme. (SOURCE)
Two motives have been offered for the murder. In 2001, Petterson's friend, Swedish journalist Gert Fylking, told the BBC that Petterson had had no grievance against Palme personally, but that while he was in prison, he had met someone who had. So after being released from prison he murdered Palme to avenge the other man's grievance. (SOURCE)
A marginally more plausible motive surfaced this week, when Östlund claimed that Petterson had mistaken Palme for a drug dealer: 'Östlund, who is now dying in hospital, says that Palme was simply the victim of mistaken identity - the real target was amphetamine dealer Sigge Cedergren, whom they had intended to attack as part of a turf war among drug dealers. Östlund says he and another man had planned to attack Cedergren together with Pettersson, but did not know that Pettersson had a gun.
Friends of Östlund told Expressen that he has not spoken out before because he was afraid of being killed.' (SOURCE)Although it's always nice to have a perp, a great deal about the assassination still doesn't make sense. Although he had murdered someone before - in 1970 - there is no evidence Pettersson ever owned a gun.
The 1970 murder weapon had been a bayonet and in the other violent incidents in which he was involved, a knife had been used. Östlund says that he did not even know that night that Pettersson had had a gun. The obvious questions, therefore, are: how did Pettersson get the gun? And are either motives plausible? Superficially, this looks a textbook case of assassination by a 'lone nut,' and perhaps it was always meant to look this way. But can we really believe that Pettersson just happened to be looking to kill a drug dealer at the exact same time and in the exact same location that the Swedish prime minister happened to be out without his bodyguard? And on a cold (minus 7 degrees) February night? Why would Petterson have expected to see Cedergren on the street at around midnight on such a cold night?The fact that Pettersen had a gun on him and fastened on Palme as his victim suggests the possibility that he was somehow manipulated into committing the crime.
There is overwhelming evidence that something unusual was afoot on the night Palme was murdered. Palme's behaviour was by no means normal that night, leading to speculation that he was supposed to meet somebody, and there is also overwhelming evidence of police complicity in the crime. (SOURCE)
At the time Palme was murdered, he was a very unpopular figure indeed with three interlocking sets of actors: the governments of South Africa, Israel and the United States. The same nexus of rightwing South Africans which was linked to the assassination in 1996 just happens to have included in its web Jack Abramoff, the Republican party operative currently embroiled in corruption scandals, whose connections back in the 80s went from South Africa to both the Reagan White House and Israel. It would seem a fair bet that Abramoff knows why Palme was killed: after all, he was the intermediary figure between Palme's three main groups of enemies.
There is something all too convenient about Palme's assassination that makes me sceptical about the new theory that he was just a victim of mistaken identity. Not only was Palme a forthright opponent of apartheid, he was pro-Palestinian and closely associated with 'the leading personalities of the non-aligned countries, for example Indira Gandhi and Rajiv Gandhi.' (SOURCE) Isn't it interesting that he was assassinated less than eighteen months after Indira Gandhi? With the deaths of Indira Gandhi and Olof Palme, two of the most important leaders of the non-aligned world were removed from the scene: it's not hard to see that the decapitation of the non-aligned movement fitted in very nicely with the interests of the Reagan White House, then absorbed by Reagan's obsession with cranking up the Cold War.What's more, by the 1980s, with Thatcherism and Reaganism in the ascendant, social democracy was being roundly dismissed by mainstream commentators as passé. Yet Palme was one of the leaders of 'the so-called Socialist International, consisting of Social Democratic Parties, which underwent a resurgence from the early 1970s onwards, engineered above all by the West German Chancellor Willy Brandt, the Austrian Chancellor Bruno Kreisky' and himself. (SOURCE)
That the 1980s saw the eclipse of social democracy and the invasion of neoliberal economic lunacy was in no small part due to the loss of such a formidable social democrat as Palme.Are there reasons to suspect American involvement in the Palme assassination? Yes, if you consider former CIA agents reliable sources. First, according to former CIA agent Gene 'Chip' Tatum, Palme 'was murdered on behalf of a hidden organization, the OSG, which had a certain colonel Oliver North in a leading role. North's ultimate superior was Vice President George Bush.' In early 1999, a Swedish-American investigator obtained a snippet from a 1997 interview in which Tatum 'disclosed how Palme had been set up and murdered.' (SOURCE) A short part of the interview can be heard here. That Tatum disappeared in 2000 and hasn't been heard of since seems an indication that after he left the CIA he made too many inconvenient disclosures for his own good.Second, an Italian investigation has established that the matter was related to Iran-Contra:'In late June-early July ... interviews with [former CIA agents Richard Brenneke and Ibrahim Razin] were broadcast in four parts by [Italian state television] TG1. The most explosive element of what they said, was that three days before Swedish Prime Minister Olof Palme was assassinated, Licio Gelli, Grand Master of the Propaganda 2 (P-2) Freemasonic lodge, had sent a telegram to Republican Party representative Philip Guarino, an intimate of George [H. W.] Bush, announcing that "the Swedish tree will be felled.'' In his sequence, Razin claimed that the text of the telegram exists in the archives of the National Security Agency, and that the FBI has opened an investigation into this. Razin added that he knew of the existence of such a telegram from a high representative of the American mafia, and that Palme was assassinated because he knew about the illegal weapons trade in connection with the Iran-Iraq war. As Brenneke put it, Palme had become a "fly in the ointment'' for those responsible for the dirty doings.' (SOURCE)
The latest revelations about the Palme assassination therefore do not close the book on the case by any means. It is the question of the murder weapon that ensures that the case still cannot be regarded as solved. Although Petterson confessed to the crime and has furnished at least two motives for doing so, he has never said anything about the gun: where it came from, why he happened to have it on him that night, and what happened to it afterwards. This implies that at the very least a second person was involved - someone who supplied the weapon, manipulated his movements that night, and who disposed of the weapon afterwards.
The only logical reason why Petterson never addressed the matter of the gun is that he refused to implicate one or more other people.If Östlund was really there - and I don't know of any witnesses who say they saw a second person lurking around with the gunman - he surely would have to know the answers to these questions.
Isn't it a little too convenient that Östlund says he didn't know anything about the gun? So let's consider the possibility that while Östlund was dying, persons unknown approached him and made it worth his while to issue a bogus statement confirming that he had seen Petterson shoot Palme, thereby confirming Petterson's earlier confession. This would be a perfect way to shut down suspicions of a conspiracy, wouldn't it? Most people would be inclined to say, well, that clinches the matter! So while I am convinced that Petersson was the gunman, I strongly question whether Östlund's deathbed confession should be accepted at face value. Its timing too - just days before the twentieth anniversary of the tragedy - is also a little hard to swallow.
Further reading: Trowbridge Ford, "Assassination of Sweden's Olof Palme (Operation Tree)" here, and Dean Andromidas, "The Palme Murder" here.
Permalink
Twenty years ago today: the assassination of Olof Palme
by: socialdemocracynow
Today, February 28, 2006, social democrats all over the world mourn the assassination of Olof Palme, the last of the great Swedish social democrats and probably the last real social democrat ever to hold the top job in any country until the unexpected and still astonishing rise of Hugo Chavez in Venezuela.Do we know who murdered Palme? Perhaps we do. A petty criminal and longtime drug abuser, Christer Petterson, who died in 2004, confessed to the murder in 2001. He was identified as the assassin by Palme's wife, Lisbet, who was herself shot during the attack. Then, on February 24, 2006, Pettersson's close friend Roger Östlund claimed on his death bed that he had actually seen Pettersson shoot Olof Palme. (SOURCE)
Two motives have been offered for the murder. In 2001, Petterson's friend, Swedish journalist Gert Fylking, told the BBC that Petterson had had no grievance against Palme personally, but that while he was in prison, he had met someone who had. So after being released from prison he murdered Palme to avenge the other man's grievance. (SOURCE)
A marginally more plausible motive surfaced this week, when Östlund claimed that Petterson had mistaken Palme for a drug dealer: 'Östlund, who is now dying in hospital, says that Palme was simply the victim of mistaken identity - the real target was amphetamine dealer Sigge Cedergren, whom they had intended to attack as part of a turf war among drug dealers. Östlund says he and another man had planned to attack Cedergren together with Pettersson, but did not know that Pettersson had a gun.
Friends of Östlund told Expressen that he has not spoken out before because he was afraid of being killed.' (SOURCE)Although it's always nice to have a perp, a great deal about the assassination still doesn't make sense. Although he had murdered someone before - in 1970 - there is no evidence Pettersson ever owned a gun.
The 1970 murder weapon had been a bayonet and in the other violent incidents in which he was involved, a knife had been used. Östlund says that he did not even know that night that Pettersson had had a gun. The obvious questions, therefore, are: how did Pettersson get the gun? And are either motives plausible? Superficially, this looks a textbook case of assassination by a 'lone nut,' and perhaps it was always meant to look this way. But can we really believe that Pettersson just happened to be looking to kill a drug dealer at the exact same time and in the exact same location that the Swedish prime minister happened to be out without his bodyguard? And on a cold (minus 7 degrees) February night? Why would Petterson have expected to see Cedergren on the street at around midnight on such a cold night?The fact that Pettersen had a gun on him and fastened on Palme as his victim suggests the possibility that he was somehow manipulated into committing the crime.
There is overwhelming evidence that something unusual was afoot on the night Palme was murdered. Palme's behaviour was by no means normal that night, leading to speculation that he was supposed to meet somebody, and there is also overwhelming evidence of police complicity in the crime. (SOURCE)
At the time Palme was murdered, he was a very unpopular figure indeed with three interlocking sets of actors: the governments of South Africa, Israel and the United States. The same nexus of rightwing South Africans which was linked to the assassination in 1996 just happens to have included in its web Jack Abramoff, the Republican party operative currently embroiled in corruption scandals, whose connections back in the 80s went from South Africa to both the Reagan White House and Israel. It would seem a fair bet that Abramoff knows why Palme was killed: after all, he was the intermediary figure between Palme's three main groups of enemies.
There is something all too convenient about Palme's assassination that makes me sceptical about the new theory that he was just a victim of mistaken identity. Not only was Palme a forthright opponent of apartheid, he was pro-Palestinian and closely associated with 'the leading personalities of the non-aligned countries, for example Indira Gandhi and Rajiv Gandhi.' (SOURCE) Isn't it interesting that he was assassinated less than eighteen months after Indira Gandhi? With the deaths of Indira Gandhi and Olof Palme, two of the most important leaders of the non-aligned world were removed from the scene: it's not hard to see that the decapitation of the non-aligned movement fitted in very nicely with the interests of the Reagan White House, then absorbed by Reagan's obsession with cranking up the Cold War.What's more, by the 1980s, with Thatcherism and Reaganism in the ascendant, social democracy was being roundly dismissed by mainstream commentators as passé. Yet Palme was one of the leaders of 'the so-called Socialist International, consisting of Social Democratic Parties, which underwent a resurgence from the early 1970s onwards, engineered above all by the West German Chancellor Willy Brandt, the Austrian Chancellor Bruno Kreisky' and himself. (SOURCE)
That the 1980s saw the eclipse of social democracy and the invasion of neoliberal economic lunacy was in no small part due to the loss of such a formidable social democrat as Palme.Are there reasons to suspect American involvement in the Palme assassination? Yes, if you consider former CIA agents reliable sources. First, according to former CIA agent Gene 'Chip' Tatum, Palme 'was murdered on behalf of a hidden organization, the OSG, which had a certain colonel Oliver North in a leading role. North's ultimate superior was Vice President George Bush.' In early 1999, a Swedish-American investigator obtained a snippet from a 1997 interview in which Tatum 'disclosed how Palme had been set up and murdered.' (SOURCE) A short part of the interview can be heard here. That Tatum disappeared in 2000 and hasn't been heard of since seems an indication that after he left the CIA he made too many inconvenient disclosures for his own good.Second, an Italian investigation has established that the matter was related to Iran-Contra:'In late June-early July ... interviews with [former CIA agents Richard Brenneke and Ibrahim Razin] were broadcast in four parts by [Italian state television] TG1. The most explosive element of what they said, was that three days before Swedish Prime Minister Olof Palme was assassinated, Licio Gelli, Grand Master of the Propaganda 2 (P-2) Freemasonic lodge, had sent a telegram to Republican Party representative Philip Guarino, an intimate of George [H. W.] Bush, announcing that "the Swedish tree will be felled.'' In his sequence, Razin claimed that the text of the telegram exists in the archives of the National Security Agency, and that the FBI has opened an investigation into this. Razin added that he knew of the existence of such a telegram from a high representative of the American mafia, and that Palme was assassinated because he knew about the illegal weapons trade in connection with the Iran-Iraq war. As Brenneke put it, Palme had become a "fly in the ointment'' for those responsible for the dirty doings.' (SOURCE)
The latest revelations about the Palme assassination therefore do not close the book on the case by any means. It is the question of the murder weapon that ensures that the case still cannot be regarded as solved. Although Petterson confessed to the crime and has furnished at least two motives for doing so, he has never said anything about the gun: where it came from, why he happened to have it on him that night, and what happened to it afterwards. This implies that at the very least a second person was involved - someone who supplied the weapon, manipulated his movements that night, and who disposed of the weapon afterwards.
The only logical reason why Petterson never addressed the matter of the gun is that he refused to implicate one or more other people.If Östlund was really there - and I don't know of any witnesses who say they saw a second person lurking around with the gunman - he surely would have to know the answers to these questions.
Isn't it a little too convenient that Östlund says he didn't know anything about the gun? So let's consider the possibility that while Östlund was dying, persons unknown approached him and made it worth his while to issue a bogus statement confirming that he had seen Petterson shoot Palme, thereby confirming Petterson's earlier confession. This would be a perfect way to shut down suspicions of a conspiracy, wouldn't it? Most people would be inclined to say, well, that clinches the matter! So while I am convinced that Petersson was the gunman, I strongly question whether Östlund's deathbed confession should be accepted at face value. Its timing too - just days before the twentieth anniversary of the tragedy - is also a little hard to swallow.
Further reading: Trowbridge Ford, "Assassination of Sweden's Olof Palme (Operation Tree)" here, and Dean Andromidas, "The Palme Murder" here.
Permalink
Sunday, February 15, 2009
Fr. Romeo J. Intengan, SJ ( PCIJ Interview, 2006)
20 FILIPINOS 20 YEARS AFTER PEOPLE POWER
Special EDSA 20th Anniversary PCIJ Issue Jan- Feb. 2006
ROMEO J. Intengan, SJ
"People power practiced too often sends a message abroad that you're an unstable country"
ROMEO INTENGAN, SJ
THE FIRST time Fr. Romeo J. Intengan, SJ, was summoned by a woman who lived in Malacañang, he had to flee the country to avoid her wrath. The woman was Imelda Marcos; the year was 1980. More recently, in November 2005, he came under fire for supposedly presenting exit scenarios to President Gloria Macapagal Arroyo. He admits she has sought his advice in the past regarding religious matters, but denies bringing up exit plans with her.
Perhaps Someone Up There has been trying to tell Intengan to stay away from the Palace. Or from women in politics. It could well be both. But then the separation of Church and state has never stopped Intengan from seeking to influence politics. As an exile in Sabah, he trained cadres belonging to the political party he helped found. More recently, he has recommended the abolition of the Intelligence Service of the Armed Forces of the Philippines.
Intengan is a man who embodies many seeming contradictions. While he endorsed the need for armed struggle after the declaration of martial law, he also had a moral dilemma because he was a priest and a doctor. He told his fellow activists, "Ok, I can be your chaplain, but I will not shoot to kill or to maim."
But after he sought refuge in Sabah in 1980, following his brush with an angry Imelda, who was probably miffed at being told pointblank that corruption and cronyism existed during her husband's rule, Intengan had to learn how to handle a gun because the camp where he stayed needed to be defended against wild monkeys. (Thankfully, he never had to kill any.)
Here is more interesting Intengan trivia: that Sabah camp was run by the Moro National Liberation Front (MNLF). There the Jesuit priest served for more than a year as physician in residence, chaplain, and political officer. In 1982, when the Malaysian government could no longer ignore accusations from the Marcos government that it was harboring Filipino rebels, Intengan had to leave, eventually ending up in Spain, where he pursued further studies in theology. He was still there when the first people power revolt kicked out Ferdinand Marcos and installed Corazon Aquino as president.
In a heartbeat, Intengan hurried home, just like other so-called Marcos exiles who returned to the Philippines almost as soon as the Marcoses landed in Hawaii.Over the last 20 years, many of these ex-exiles have worked their way up — in some cases, literally from scratch — to positions of power and influence in their chosen fields. But there are those who came back and merely took up where they had left off, such as Eugenio Lopez III, heir to the Lopez family fortune and now chair of the ABS-CBN group of companies; radio station owner Ramon 'RJ' Jacinto, another rich man's son who has since expanded his own businesses; and politician Sergio Osmeña III, now on his third term as a senator.
Others include the likes of Heherson Alvarez, who fled the Philippines as a political activist, came back to join the Aquino government, and later became senator; and his wife Cecile Guidote Alvarez, founder of the Philippine Educational Theatre Association (PETA) and now executive director of the National Commission for Culture and the Arts. Then of course there are Intengan and his friend National Security Adviser Norberto Gonzales, with whom he co-founded the Philippine Democratic Socialist Party (PDSP) in 1973. Both would be thrown in jail in 1978 for leading a march protesting the fraudulent elections held in April that year. Two years later, Imelda Marcos, suspicious that the PDSP was involved in bombings attributed to the April 6 movement (it wasn't), would summon Intengan to the Palace — and have him worried enough to make him hie off to Sabah by way of Jolo.
GONZALES ONCE told Intengan, "You provide the theory, I'll provide the action." The reference was to the priest's role as head of the PDSP's Education Commission — a position the latter has held from the 1970s until today. Intengan's main contribution to PDSP, as he sees it, was to "understand and develop and adapt to the Philippine situation the democratic-socialist and social-democratic… ideological continuum or spectrum." During its early years, PDSP's most important contribution to the Philippine political scene was to present a third alternative to the ones presented by Marcos and the communists. And so, it was not just the Marcos dictatorship that PDSP opposed, but the communist movement as well.
To this day, there is no love lost between the PDSP and the Communist Party of the Philippines (CPP). In a recent article posted on its website, the PDSP said the CPP and its political and military wings deserve the terrorist tag because they refuse to give up arms. "The CPP/NPA/NDF (do) not want the terror and the violence to cease," it said. "(They) mean to grab power at all costs, even at the cost of peace."
Intengan himself explains the position taken by the PDSP in the 1970s: "Our activism was really a provision of an alternative, a progressive one, which goes for radical social change but a democratic one, not a vanguardist party claiming to have a monopoly of wisdom and aiming for a monopoly of power."
That was in an era when the growing political and societal crises led some priests and nuns to became either supporters of the CPP or its full-fledged members. Luis Jalandoni of the CPP's political wing, the National Democratic Front (NDF), for instance, was a former priest. His wife and fellow NDF member Coni Ledesma was a former nun, as well as one of the founders of the Christians for National Liberation, the underground organization for subversive priests and nuns.
Many of these radical religious supported liberation theology, which interprets the Catholic faith through the eyes of the poor and sees Jesus as a "liberator." In fact, the Society of Jesus's 28th superior general in the Philippines, Fr. Pedro Arrupe, was himself a champion of liberation theology and the Jesuits themselves became identified with the movement, which promotes the active participation of the Church in bringing about social justice.
But Popes John Paul II and Cardinal Joseph Ratzinger (now Pope Benedict XVI) frowned on it because of its perceived Marxist leanings. Intengan himself belonged to a less radical tradition, as did many of his fellow Jesuits in the Philippines, who were kept under the watchful eye of the Marcos regime.
UPON HIS return to the Philippines, Intengan proceeded to conduct training sessions for cadres of the now-legal PDSP. He rejoiced at the "restoration of democratic space, where groups which were within the democratic-political spectrum… could now operate freely." He also appreciated the dismantling of the communications and transport monopolies, which allowed the economy to flourish. But he did have a few regrets.
Recalls Intengan, who eventually became the provincial superior of the Jesuits in the Philippines from 1998 to 2004: "There was this relapse to reliance on traditional politics... I (did) not like it on the level of heart or gut, but I understood the reason." Intengan allows that President Corazon Aquino needed the support of the military and politicians to survive. But it was unfortunate, he says, that the social revolution he was hoping for — "where the livelihood of the poor would have been uplifted, where basic equality would have been established, where the political system would have matured to a politics of ideas, of worldview, of real societal models… where culture in the high sense would have been available to all the people" — did not take place.
And while Intengan agrees that there was no one who could have taken the place of Jaime Cardinal Sin in 1986, he observes, "It might also be a mistake to adulate Cardinal Sin." He believes Sin may have erred in endorsing the candidacies of Ramon Mitra and Alfredo Lim in the presidential elections held in 1992 and 1998, respectively, because, he argues, it wasn't made clear to the people why there was a need for such "drastic Church intervention." Intengan also says, "Cardinal Sin's way of doing things was extraordinary in… at least many senses." Filipinos, however, have come to expect the kind of leadership the late Sin provided. That may be why many were surprised when, in July 2005, the Catholic Bishops' Conference of the Philippines did not ask for Arroyo's resignation and instead called for discernment.
The 63-year-old Intengan says neither Arroyo nor Gonzales had asked him to "influence" the bishops. "The more you try to influence (the bishops), the more resentment you will get," he says. "That might have been part of the reason why they decided not to call for resignation." He also doesn't believe Pope Benedict XVI had anything to do with the bishops' pronouncement. The present pontiff, he says, is actually "much more tolerant of dissent and pluralism than the previous pope." Besides, Intengan believes the Church should not get into "a habit of making very detailed and specific and peremptory political orders to Her people. That's the role of the lay people to discern."
The difficulty at this point, according to Intengan, is that in 1986, "the immediate problem was clear: to restore democracy and respect for human rights… Now the problematic is much different. The lines are not clearly drawn."
"Ethics has at least two aspects," he explains. "You have the ethics of principle and the ethics of responsibility, which considers consequences. And that's where people are divided now. We all know how flawed our ruling class is. But what do you do after? Who will take over?"
He says the Church hierarchy is right in not advocating a position for Catholics to follow in the current political impasse. Yet he doubts the Church's ability to shepherd its flock in the future, noting that the proliferation of Catholic and non-Catholic groups such as El Shaddai and Iglesia ni Kristo is proof that "the Catholic Church has not been effective in handling or responding to very concrete needs of Her flock."
The Church, he says, has failed to communicate effectively with the faithful. As for the government, Intengan cannot help but be amused by charges that the current administration has all but imposed martial law. He says that under Marcos, "running priest" Fr. Robert Reyes would have been arrested and detained a long time ago.
Intengan, though, doesn't believe people power is a viable means for change at this point. "People power practiced too often sends a message abroad that you're a very unstable country," he says. He prefers that institutions are strengthened, "so that even in an emergency they can take care of transitions more effectively than in the past." — Vernon R. Totanes
Copyright © 2006 All rights reserved.PHILIPPINE CENTER FOR INVESTIGATIVE JOURNALISM
Special EDSA 20th Anniversary PCIJ Issue Jan- Feb. 2006
ROMEO J. Intengan, SJ
"People power practiced too often sends a message abroad that you're an unstable country"
ROMEO INTENGAN, SJ
THE FIRST time Fr. Romeo J. Intengan, SJ, was summoned by a woman who lived in Malacañang, he had to flee the country to avoid her wrath. The woman was Imelda Marcos; the year was 1980. More recently, in November 2005, he came under fire for supposedly presenting exit scenarios to President Gloria Macapagal Arroyo. He admits she has sought his advice in the past regarding religious matters, but denies bringing up exit plans with her.
Perhaps Someone Up There has been trying to tell Intengan to stay away from the Palace. Or from women in politics. It could well be both. But then the separation of Church and state has never stopped Intengan from seeking to influence politics. As an exile in Sabah, he trained cadres belonging to the political party he helped found. More recently, he has recommended the abolition of the Intelligence Service of the Armed Forces of the Philippines.
Intengan is a man who embodies many seeming contradictions. While he endorsed the need for armed struggle after the declaration of martial law, he also had a moral dilemma because he was a priest and a doctor. He told his fellow activists, "Ok, I can be your chaplain, but I will not shoot to kill or to maim."
But after he sought refuge in Sabah in 1980, following his brush with an angry Imelda, who was probably miffed at being told pointblank that corruption and cronyism existed during her husband's rule, Intengan had to learn how to handle a gun because the camp where he stayed needed to be defended against wild monkeys. (Thankfully, he never had to kill any.)
Here is more interesting Intengan trivia: that Sabah camp was run by the Moro National Liberation Front (MNLF). There the Jesuit priest served for more than a year as physician in residence, chaplain, and political officer. In 1982, when the Malaysian government could no longer ignore accusations from the Marcos government that it was harboring Filipino rebels, Intengan had to leave, eventually ending up in Spain, where he pursued further studies in theology. He was still there when the first people power revolt kicked out Ferdinand Marcos and installed Corazon Aquino as president.
In a heartbeat, Intengan hurried home, just like other so-called Marcos exiles who returned to the Philippines almost as soon as the Marcoses landed in Hawaii.Over the last 20 years, many of these ex-exiles have worked their way up — in some cases, literally from scratch — to positions of power and influence in their chosen fields. But there are those who came back and merely took up where they had left off, such as Eugenio Lopez III, heir to the Lopez family fortune and now chair of the ABS-CBN group of companies; radio station owner Ramon 'RJ' Jacinto, another rich man's son who has since expanded his own businesses; and politician Sergio Osmeña III, now on his third term as a senator.
Others include the likes of Heherson Alvarez, who fled the Philippines as a political activist, came back to join the Aquino government, and later became senator; and his wife Cecile Guidote Alvarez, founder of the Philippine Educational Theatre Association (PETA) and now executive director of the National Commission for Culture and the Arts. Then of course there are Intengan and his friend National Security Adviser Norberto Gonzales, with whom he co-founded the Philippine Democratic Socialist Party (PDSP) in 1973. Both would be thrown in jail in 1978 for leading a march protesting the fraudulent elections held in April that year. Two years later, Imelda Marcos, suspicious that the PDSP was involved in bombings attributed to the April 6 movement (it wasn't), would summon Intengan to the Palace — and have him worried enough to make him hie off to Sabah by way of Jolo.
GONZALES ONCE told Intengan, "You provide the theory, I'll provide the action." The reference was to the priest's role as head of the PDSP's Education Commission — a position the latter has held from the 1970s until today. Intengan's main contribution to PDSP, as he sees it, was to "understand and develop and adapt to the Philippine situation the democratic-socialist and social-democratic… ideological continuum or spectrum." During its early years, PDSP's most important contribution to the Philippine political scene was to present a third alternative to the ones presented by Marcos and the communists. And so, it was not just the Marcos dictatorship that PDSP opposed, but the communist movement as well.
To this day, there is no love lost between the PDSP and the Communist Party of the Philippines (CPP). In a recent article posted on its website, the PDSP said the CPP and its political and military wings deserve the terrorist tag because they refuse to give up arms. "The CPP/NPA/NDF (do) not want the terror and the violence to cease," it said. "(They) mean to grab power at all costs, even at the cost of peace."
Intengan himself explains the position taken by the PDSP in the 1970s: "Our activism was really a provision of an alternative, a progressive one, which goes for radical social change but a democratic one, not a vanguardist party claiming to have a monopoly of wisdom and aiming for a monopoly of power."
That was in an era when the growing political and societal crises led some priests and nuns to became either supporters of the CPP or its full-fledged members. Luis Jalandoni of the CPP's political wing, the National Democratic Front (NDF), for instance, was a former priest. His wife and fellow NDF member Coni Ledesma was a former nun, as well as one of the founders of the Christians for National Liberation, the underground organization for subversive priests and nuns.
Many of these radical religious supported liberation theology, which interprets the Catholic faith through the eyes of the poor and sees Jesus as a "liberator." In fact, the Society of Jesus's 28th superior general in the Philippines, Fr. Pedro Arrupe, was himself a champion of liberation theology and the Jesuits themselves became identified with the movement, which promotes the active participation of the Church in bringing about social justice.
But Popes John Paul II and Cardinal Joseph Ratzinger (now Pope Benedict XVI) frowned on it because of its perceived Marxist leanings. Intengan himself belonged to a less radical tradition, as did many of his fellow Jesuits in the Philippines, who were kept under the watchful eye of the Marcos regime.
UPON HIS return to the Philippines, Intengan proceeded to conduct training sessions for cadres of the now-legal PDSP. He rejoiced at the "restoration of democratic space, where groups which were within the democratic-political spectrum… could now operate freely." He also appreciated the dismantling of the communications and transport monopolies, which allowed the economy to flourish. But he did have a few regrets.
Recalls Intengan, who eventually became the provincial superior of the Jesuits in the Philippines from 1998 to 2004: "There was this relapse to reliance on traditional politics... I (did) not like it on the level of heart or gut, but I understood the reason." Intengan allows that President Corazon Aquino needed the support of the military and politicians to survive. But it was unfortunate, he says, that the social revolution he was hoping for — "where the livelihood of the poor would have been uplifted, where basic equality would have been established, where the political system would have matured to a politics of ideas, of worldview, of real societal models… where culture in the high sense would have been available to all the people" — did not take place.
And while Intengan agrees that there was no one who could have taken the place of Jaime Cardinal Sin in 1986, he observes, "It might also be a mistake to adulate Cardinal Sin." He believes Sin may have erred in endorsing the candidacies of Ramon Mitra and Alfredo Lim in the presidential elections held in 1992 and 1998, respectively, because, he argues, it wasn't made clear to the people why there was a need for such "drastic Church intervention." Intengan also says, "Cardinal Sin's way of doing things was extraordinary in… at least many senses." Filipinos, however, have come to expect the kind of leadership the late Sin provided. That may be why many were surprised when, in July 2005, the Catholic Bishops' Conference of the Philippines did not ask for Arroyo's resignation and instead called for discernment.
The 63-year-old Intengan says neither Arroyo nor Gonzales had asked him to "influence" the bishops. "The more you try to influence (the bishops), the more resentment you will get," he says. "That might have been part of the reason why they decided not to call for resignation." He also doesn't believe Pope Benedict XVI had anything to do with the bishops' pronouncement. The present pontiff, he says, is actually "much more tolerant of dissent and pluralism than the previous pope." Besides, Intengan believes the Church should not get into "a habit of making very detailed and specific and peremptory political orders to Her people. That's the role of the lay people to discern."
The difficulty at this point, according to Intengan, is that in 1986, "the immediate problem was clear: to restore democracy and respect for human rights… Now the problematic is much different. The lines are not clearly drawn."
"Ethics has at least two aspects," he explains. "You have the ethics of principle and the ethics of responsibility, which considers consequences. And that's where people are divided now. We all know how flawed our ruling class is. But what do you do after? Who will take over?"
He says the Church hierarchy is right in not advocating a position for Catholics to follow in the current political impasse. Yet he doubts the Church's ability to shepherd its flock in the future, noting that the proliferation of Catholic and non-Catholic groups such as El Shaddai and Iglesia ni Kristo is proof that "the Catholic Church has not been effective in handling or responding to very concrete needs of Her flock."
The Church, he says, has failed to communicate effectively with the faithful. As for the government, Intengan cannot help but be amused by charges that the current administration has all but imposed martial law. He says that under Marcos, "running priest" Fr. Robert Reyes would have been arrested and detained a long time ago.
Intengan, though, doesn't believe people power is a viable means for change at this point. "People power practiced too often sends a message abroad that you're a very unstable country," he says. He prefers that institutions are strengthened, "so that even in an emergency they can take care of transitions more effectively than in the past." — Vernon R. Totanes
Copyright © 2006 All rights reserved.PHILIPPINE CENTER FOR INVESTIGATIVE JOURNALISM
Saturday, February 14, 2009
On Election Automation 3
Credibility, transparency more important than speed in 2010 elections—NSA Gonzales
“CREDIBILITY and transparency of the entire election process are as important as, or even more important than, speed in the proclamation of election results in 2010.”
National Security Adviser Norberto Gonzales yesterday made this assertion as he reacted to the Commission on Elections' claim that the results of the presidential elections will be known at the end of the voting day itself with the poll automation version that the body has chosen to adopt, the optical mark recognition (OMR) system.
“Speed alone will not make an election credible; transparency will. And speed should not be achieved at the expense of credibility, ” Gonzales said, explaining that OES is the automated election system that is “most transparent, least vulnerable to wholesale fraud and most fit to the present level of readiness of the country's electorate.”
Gonzales pointed out that most of the country's electorate at present have not touched a computer. He added: “Most voters would trust a system more where they can actually see the counting of ballots.”
OES combines manual voting and precinct counting with automated consolidation and transmission of votes from the polling centers to the national level while OMR operates through instantaneous and internal tally of votes.
Gonzales noted that the proponents of OES have explained that OMR is vulnerable to automated wholesale fraud because it involves software programs with key to code known only to the vendor and the Comelec and these software programs can be manipulated by a few computer specialists.
OES is proposed by a group of election automation experts led by former Comelec chair Christian Monsod. Gonzales, along with at least 38 bishops and the Catholic Bishops' Conference of the Philippines' socio-political arm, the National Secretariat for Social Action, has been backing the group's proposal.
In their letter to the Comelec, the bishops expressed their fear for the fact that in OMR, the electorate cannot manually recheck or validate the results of the election.
The Malacanang official emphasized that though OES will not be as speedy as OMR in coming up with the final tally, it will already cut the time of canvassing for votes for national positions from more than forty days to just 4-5 days, without compromising transparency of the process and the credibility of its results.
Gonzales also refuted the claim of the Comelec that the OES is against Republic Act 9369, the law on election automation.
“There is no provision in the law prohibiting the Comelec from adopting this combined election system,” he said.
“CREDIBILITY and transparency of the entire election process are as important as, or even more important than, speed in the proclamation of election results in 2010.”
National Security Adviser Norberto Gonzales yesterday made this assertion as he reacted to the Commission on Elections' claim that the results of the presidential elections will be known at the end of the voting day itself with the poll automation version that the body has chosen to adopt, the optical mark recognition (OMR) system.
“Speed alone will not make an election credible; transparency will. And speed should not be achieved at the expense of credibility, ” Gonzales said, explaining that OES is the automated election system that is “most transparent, least vulnerable to wholesale fraud and most fit to the present level of readiness of the country's electorate.”
Gonzales pointed out that most of the country's electorate at present have not touched a computer. He added: “Most voters would trust a system more where they can actually see the counting of ballots.”
OES combines manual voting and precinct counting with automated consolidation and transmission of votes from the polling centers to the national level while OMR operates through instantaneous and internal tally of votes.
Gonzales noted that the proponents of OES have explained that OMR is vulnerable to automated wholesale fraud because it involves software programs with key to code known only to the vendor and the Comelec and these software programs can be manipulated by a few computer specialists.
OES is proposed by a group of election automation experts led by former Comelec chair Christian Monsod. Gonzales, along with at least 38 bishops and the Catholic Bishops' Conference of the Philippines' socio-political arm, the National Secretariat for Social Action, has been backing the group's proposal.
In their letter to the Comelec, the bishops expressed their fear for the fact that in OMR, the electorate cannot manually recheck or validate the results of the election.
The Malacanang official emphasized that though OES will not be as speedy as OMR in coming up with the final tally, it will already cut the time of canvassing for votes for national positions from more than forty days to just 4-5 days, without compromising transparency of the process and the credibility of its results.
Gonzales also refuted the claim of the Comelec that the OES is against Republic Act 9369, the law on election automation.
“There is no provision in the law prohibiting the Comelec from adopting this combined election system,” he said.
Articles by Antonio C. Abaya (2)
Leftists and Comunnists
By Antonio C. Abaya
October 20,2005
Though I arrived several minutes late at ABS-CBN for our interview with Ces Drilon last week, I did hear my friend (and former colleague in the Kabataang Makabayan) Joel Rocamora twit National Insecurity Adviser Norberto Gonzales for estimating that 83% of those who demonstrate against President Arroyo were communists.Such “anti-communist rhetoric,” sniffed Joel, “should have gone away with the Berlin Wall.”
I do not know where Gonzales got his 83% figure, which may or may not be accurate, but he was, without realizing it, maintaining the fundamental balance in the universe.As physicists will tell you, everything comes in pairs: positive and negative, action and reaction, attraction and repulsion, matter and anti-matter, mass and energy, gravity and anti-gravity. Without the parity principle, nothing would make any sense.
So if it is acceptable for people like Joma Sison and Luis Jalandoni to spout “pro-communist rhetoric”, it should equally be acceptable for people like Bert Gonzales and Tony Abaya to spout “anti-communist rhetoric.”
And speaking of the Berlin Wall, exactly who won and who lost (they also come in pairs) in the ideological debate when that monument to Failure was torn down in 1989? Or when the Soviet Union collapsed all by itself in 1991? Or when China re-embraced the profit motive, starting in 1979?I happened to be in Berlin three days before the Wall was suddenly and hurriedly put up, in August 1961, by the East German (or communist) government, to stanch the flow of East Germans fleeing to the West. East Germany was hemorrhaging to death as hundreds of thousands of its people abandoned the East for the West, lured by its evident material prosperity and its open society. The Berlin Wall was an admission of failure, the failure of the Socialist Dream.
I stayed in a youth hostel or jugendherberge in the fashionable Wannsee district of Berlin, housed in what must once have been the servants’ quarters of the adjacent Kaiser Wilhelm Schloss or castle, hemmed in on three sides by a barbed-wire enclosure that was part of the boundary between East Germany and West Berlin.The hostel was overflowing with fluchtlinger or refugees.
As I can speak some German, I often got into conversation with them and with people on the other side of the barbed wire fence. The most common complaint was the lack of food and other basic necessities.And I often ventured into East Berlin on my Vespa to savor at first hand the joyless drabness of Unter den Linden and Alexanderplatz and Stalinallee in the capital of what was then billed as the most advanced socialist state in the world. If this was advanced, I shuddered to imagine what ordinary looked like. No wonder its people were leaving in droves.
In 1985, I wrote and published a booklet titled “A Funny Thing Happened on the Way to Communism.”In it, I wrote that the Socialist Dream that had begun with Karl Marx’s and Friedrich Engels’ Communist Manifesto” in 1848 was unraveling because of catastrophic failures and was heading towards the garbage dump of history.
Only four years later, in 1989, millions of East Germans, Poles, Hungarians, Czechs, Slovaks, Bulgars, etc – including their intellectuals, their artists, their civil servants, their students, their workers, their housewives – literally walked out on their governments, causing their communist regimes to collapse…with hardly a shot being fired in anger against anyone. The local flood that I had witnessed in Berlin in 1961 had grown into a giant tsunami in 1989 that swept everything away.
Two more years later, in 1991, the Soviet Union itself – where the Socialist Dream had first assumed concrete reality in 1917 – also collapsed from the sheer weight of its failures, without any help from the evil Americans, despite (some Soviet communists say, because of) the efforts of the last Soviet president, Mikhail Gorbachev, to reform their sclerotic system with glasnost and perestroika.In “A Funny Thing,” I blamed the failure of the Socialist Dream on Marx’s Theory of Surplus Value which equated profit-making with exploitation and thus made all private enterprises ideologically unacceptable. Thus in the Soviet Union, all enterprises – even innocuous ones like taxicabs, shoe repair shops and cigarette kiosks – were owned by the socialist state. No one was allowed to make a profit from the labor of others.
I predicted in that 1985 book that the People’s Republic of China under Deng Xiaoping, which had gradually reintroduced the profit motive starting in 1979, would overtake the Soviet Union in economic development, which is exactly what eventually happened.Deng at first allowed entrepreneurs a maximum of eight employees each, to be exempted from the Marxist onus of exploitation. This limit was later raised to 50, then to 1,000; then, as I predicted, the limit would be removed entirely, thus spawning thousands, later millions, of rich, even millionaire, Chinese entrepreneurs, a tacit but total rejection of the Marxist theory of surplus value and a blanket repudiation of the Maoist ideal of anthill-like egalitarianism.Without that Marxist theory and without that Maoist ideal, the People’s Republic of China is just another one-party fascist state that uses its instruments of coercion to maintain a monopoly of power for the entrenched party, the Communist Party.
Yes, Joel, “anti-communist rhetoric” should have gone away with the Berlin Wall in 1989. But “pro-communist rhetoric” did not. Joma Sison and the CPP-NDF-NPA continued and continue to wage their revolution in favor of Failure as if 1989-1991 had never happened at all.
On the contrary, when the People’s Liberation Army sent troops and armored personnel carriers into Tienanmen Square in Beijing in June 1989 to sweep away with their machine-guns hundreds of thousands of students demonstrating for more democracy in their society – another monument to Failure – only Maoists Joma Sison of the CPP and Crispin Beltran of the KMU applauded the massacre. Consistent with the communist Golden Rule: Do not do unto Us what We will do unto You once we are in Power.
So why should “pro-communist rhetoric” enjoy a monopoly in the public discourse, without being challenged by “anti-communist rhetoric?” Is Failure the ultimate destiny of humankind, since Communism is claimed to be the last stage of societal evolution?
The questions for Filipinos in 2005 are a) why does a communist insurgency still persist in this country when it had long been extinguished in Indonesia, Malaysia, Thailand and Singapore, and was never allowed to rear its head in Taiwan and South Korea? b) why do communists and pro-communists continue to be lionized in Philippine media as if they had anything substantial, original or meaningful to say? (which would never have been allowed in Indonesia or Malaysia or Singapore or Thailand or Taiwan or South Korea; onli in da istupid Pilipins) and c) why do Philippine media almost always refer to them as ‘leftists’ or ‘activists’ or ‘militants’, almost never by their correct label, which is ‘communists?’Question (a) would require an entire column or more to discuss, but questions (b) and (c) can be answered by two words: ‘compliant naivete.’
Most media persons here are either former partisans of the communist movement themselves, or (among the younger ones) consider it politically incorrect to profile anyone as a ‘communist,’ as if being a communist was a crime or a social disease or something to be ashamed of.But this is grossly inaccurate.
In American domestic politics, Bill Clinton and Hillary Rodham Clinton are ‘leftists’ but they are not communists. In Western Europe, socialists and social democrats are ‘leftists’ but they are not communists. In Anglo-Saxon countries, Labour politicians are ‘leftists’ but they are not communists. In Spain, ETA Basque separatists are ‘militants’ but they are not communists. In Ireland, IRA guerillas are ‘activists’ but they are not communists.
By deliberately avoiding the use of the word ‘communist’ in favor of more innocuous terms when referring to communists, Philippine media in effect protect them from the opprobrium of being associated with Failure, which is the historical legacy of Communism, in Europe, in Asia and in Latin America (when Fidel Castro dies and Cuba unravels).Thus Philippine media are complicit in the prolonged adolescence of Filipino communists and, by extension, the continued persistence of the communist insurgency, about which Col. Ricardo Morales and other military officers expressed their frustration in recent installments of this column.
Admittedly, socio-economic conditions exist that nurture the discontent that favors the insurgency. But these conditions take time to correct, and they will never be corrected at all as long as media – the most influential sector of Philippine society - show a pronounced bias in favor of communists and pro-communists, either out of a misplaced sense of social justice or just plain, insurmountable ignorance of recent history.
Philippine media should learn to outgrow their own extended adolescence and learn to ask the hard question that I asked Renato Constantino Sr. and Joma Sison years ago, to which they never gave an answer: What makes you think that Filipino communists will succeed in building the Ideal Society that the Russian communists failed to build, even after 74 years of total and absolute political control?
By Antonio C. Abaya
October 20,2005
Though I arrived several minutes late at ABS-CBN for our interview with Ces Drilon last week, I did hear my friend (and former colleague in the Kabataang Makabayan) Joel Rocamora twit National Insecurity Adviser Norberto Gonzales for estimating that 83% of those who demonstrate against President Arroyo were communists.Such “anti-communist rhetoric,” sniffed Joel, “should have gone away with the Berlin Wall.”
I do not know where Gonzales got his 83% figure, which may or may not be accurate, but he was, without realizing it, maintaining the fundamental balance in the universe.As physicists will tell you, everything comes in pairs: positive and negative, action and reaction, attraction and repulsion, matter and anti-matter, mass and energy, gravity and anti-gravity. Without the parity principle, nothing would make any sense.
So if it is acceptable for people like Joma Sison and Luis Jalandoni to spout “pro-communist rhetoric”, it should equally be acceptable for people like Bert Gonzales and Tony Abaya to spout “anti-communist rhetoric.”
And speaking of the Berlin Wall, exactly who won and who lost (they also come in pairs) in the ideological debate when that monument to Failure was torn down in 1989? Or when the Soviet Union collapsed all by itself in 1991? Or when China re-embraced the profit motive, starting in 1979?I happened to be in Berlin three days before the Wall was suddenly and hurriedly put up, in August 1961, by the East German (or communist) government, to stanch the flow of East Germans fleeing to the West. East Germany was hemorrhaging to death as hundreds of thousands of its people abandoned the East for the West, lured by its evident material prosperity and its open society. The Berlin Wall was an admission of failure, the failure of the Socialist Dream.
I stayed in a youth hostel or jugendherberge in the fashionable Wannsee district of Berlin, housed in what must once have been the servants’ quarters of the adjacent Kaiser Wilhelm Schloss or castle, hemmed in on three sides by a barbed-wire enclosure that was part of the boundary between East Germany and West Berlin.The hostel was overflowing with fluchtlinger or refugees.
As I can speak some German, I often got into conversation with them and with people on the other side of the barbed wire fence. The most common complaint was the lack of food and other basic necessities.And I often ventured into East Berlin on my Vespa to savor at first hand the joyless drabness of Unter den Linden and Alexanderplatz and Stalinallee in the capital of what was then billed as the most advanced socialist state in the world. If this was advanced, I shuddered to imagine what ordinary looked like. No wonder its people were leaving in droves.
In 1985, I wrote and published a booklet titled “A Funny Thing Happened on the Way to Communism.”In it, I wrote that the Socialist Dream that had begun with Karl Marx’s and Friedrich Engels’ Communist Manifesto” in 1848 was unraveling because of catastrophic failures and was heading towards the garbage dump of history.
Only four years later, in 1989, millions of East Germans, Poles, Hungarians, Czechs, Slovaks, Bulgars, etc – including their intellectuals, their artists, their civil servants, their students, their workers, their housewives – literally walked out on their governments, causing their communist regimes to collapse…with hardly a shot being fired in anger against anyone. The local flood that I had witnessed in Berlin in 1961 had grown into a giant tsunami in 1989 that swept everything away.
Two more years later, in 1991, the Soviet Union itself – where the Socialist Dream had first assumed concrete reality in 1917 – also collapsed from the sheer weight of its failures, without any help from the evil Americans, despite (some Soviet communists say, because of) the efforts of the last Soviet president, Mikhail Gorbachev, to reform their sclerotic system with glasnost and perestroika.In “A Funny Thing,” I blamed the failure of the Socialist Dream on Marx’s Theory of Surplus Value which equated profit-making with exploitation and thus made all private enterprises ideologically unacceptable. Thus in the Soviet Union, all enterprises – even innocuous ones like taxicabs, shoe repair shops and cigarette kiosks – were owned by the socialist state. No one was allowed to make a profit from the labor of others.
I predicted in that 1985 book that the People’s Republic of China under Deng Xiaoping, which had gradually reintroduced the profit motive starting in 1979, would overtake the Soviet Union in economic development, which is exactly what eventually happened.Deng at first allowed entrepreneurs a maximum of eight employees each, to be exempted from the Marxist onus of exploitation. This limit was later raised to 50, then to 1,000; then, as I predicted, the limit would be removed entirely, thus spawning thousands, later millions, of rich, even millionaire, Chinese entrepreneurs, a tacit but total rejection of the Marxist theory of surplus value and a blanket repudiation of the Maoist ideal of anthill-like egalitarianism.Without that Marxist theory and without that Maoist ideal, the People’s Republic of China is just another one-party fascist state that uses its instruments of coercion to maintain a monopoly of power for the entrenched party, the Communist Party.
Yes, Joel, “anti-communist rhetoric” should have gone away with the Berlin Wall in 1989. But “pro-communist rhetoric” did not. Joma Sison and the CPP-NDF-NPA continued and continue to wage their revolution in favor of Failure as if 1989-1991 had never happened at all.
On the contrary, when the People’s Liberation Army sent troops and armored personnel carriers into Tienanmen Square in Beijing in June 1989 to sweep away with their machine-guns hundreds of thousands of students demonstrating for more democracy in their society – another monument to Failure – only Maoists Joma Sison of the CPP and Crispin Beltran of the KMU applauded the massacre. Consistent with the communist Golden Rule: Do not do unto Us what We will do unto You once we are in Power.
So why should “pro-communist rhetoric” enjoy a monopoly in the public discourse, without being challenged by “anti-communist rhetoric?” Is Failure the ultimate destiny of humankind, since Communism is claimed to be the last stage of societal evolution?
The questions for Filipinos in 2005 are a) why does a communist insurgency still persist in this country when it had long been extinguished in Indonesia, Malaysia, Thailand and Singapore, and was never allowed to rear its head in Taiwan and South Korea? b) why do communists and pro-communists continue to be lionized in Philippine media as if they had anything substantial, original or meaningful to say? (which would never have been allowed in Indonesia or Malaysia or Singapore or Thailand or Taiwan or South Korea; onli in da istupid Pilipins) and c) why do Philippine media almost always refer to them as ‘leftists’ or ‘activists’ or ‘militants’, almost never by their correct label, which is ‘communists?’Question (a) would require an entire column or more to discuss, but questions (b) and (c) can be answered by two words: ‘compliant naivete.’
Most media persons here are either former partisans of the communist movement themselves, or (among the younger ones) consider it politically incorrect to profile anyone as a ‘communist,’ as if being a communist was a crime or a social disease or something to be ashamed of.But this is grossly inaccurate.
In American domestic politics, Bill Clinton and Hillary Rodham Clinton are ‘leftists’ but they are not communists. In Western Europe, socialists and social democrats are ‘leftists’ but they are not communists. In Anglo-Saxon countries, Labour politicians are ‘leftists’ but they are not communists. In Spain, ETA Basque separatists are ‘militants’ but they are not communists. In Ireland, IRA guerillas are ‘activists’ but they are not communists.
By deliberately avoiding the use of the word ‘communist’ in favor of more innocuous terms when referring to communists, Philippine media in effect protect them from the opprobrium of being associated with Failure, which is the historical legacy of Communism, in Europe, in Asia and in Latin America (when Fidel Castro dies and Cuba unravels).Thus Philippine media are complicit in the prolonged adolescence of Filipino communists and, by extension, the continued persistence of the communist insurgency, about which Col. Ricardo Morales and other military officers expressed their frustration in recent installments of this column.
Admittedly, socio-economic conditions exist that nurture the discontent that favors the insurgency. But these conditions take time to correct, and they will never be corrected at all as long as media – the most influential sector of Philippine society - show a pronounced bias in favor of communists and pro-communists, either out of a misplaced sense of social justice or just plain, insurmountable ignorance of recent history.
Philippine media should learn to outgrow their own extended adolescence and learn to ask the hard question that I asked Renato Constantino Sr. and Joma Sison years ago, to which they never gave an answer: What makes you think that Filipino communists will succeed in building the Ideal Society that the Russian communists failed to build, even after 74 years of total and absolute political control?
Articles by Antonio C. Abaya (1) (2006)
Sleeping with the Communists
By Antonio C. AbayaFebruary 18,2006
The Arroyo government has given as the reason for the declaration of a state of national emergency a growing tactical alliance between young military officers and the Communist movement, in their common desire to force President Arroyo out of office.
I realize that among the liberals in the burgis community, it is fashionable to dismiss the communist bogeyman as a figment of someone’s imagination. Or that this concern is a throwback to the Cold War era, especially during the McCarthy witch hunts in the US of the 1950s, and should no longer be taken seriously half a century later.But in its Jan. 28 issue, the Philippine Daily Inquirer, the favorite newspaper of those who seek to overthrow the government, confirmed such a tactical alliance in a front-page story headlined Left-Right alliance vs GMA confirmed.Reported the Inquirer: “Disgruntled officers of the AFP and the PNP are reaching out to people’s organizations to get support for their grievances,” Bayan Muna Rep. Teodoro Casino told reporters….Casino said that as in the ouster of Presidents Marcos and Estrada in 1986 and 2001, the military’s withdrawal of support would be “crucial” to the removal of President Arroyo from power.“But their exact role in her ouster will be determined, to a large extent, by what the people’s movement can accept ,” Casino said.
This means – oh, you naïve warriors of the Magdalo – it will be the communist politburo, not you, who will decide what you can and cannot do in the struggle against President Arroyo. The same warning can be directed to the ideological naifs of the Black and Blue Movement, the Hyatt 10 and the likes of Tita Cory and Triccie and Bettina and Josie who have naively chosen to ally themselves with the communists in their efforts to unseat the embattled GMA.You – Magdalo idealists and burgis ideological naifs - will all be playing mere supporting roles.. The communists intend to play the central starring role because they want to dominate the subsequent ‘transition council,’ almost certainly the one being stitched together by Boy Morales, chief political lieutenant of Erap (who is the likely financier of all this as he was of the Oakwood Mutiny in July 2003) and co-founder in 1972 of the National Democratic Front (NDF), the political arm of the Communist Party of the Philippines (CPP). Even Joma Sison was supremely confident, in a recent message from Utrecht, that the Arroyo government would be replaced by this ‘transition council.’
Again, the liberals among the burgis will scoff at this interpretation, but the fact is that a communist insurgency is raging in this country with renewed vigor in 2006, and its goal remains the same as it was in 1949 and in 1969: the violent overthrow of the bourgeois democratic state and its replacement with a Marxist-Leninist “dictatorship of the proletariat,” in which the CPP of Joma Sison will be vested with monopoly of power. In other words, no opposition parties in Joma’s paradise state, let me remind Chiz, Peter Alan, Gilbert, Rolex, Devill, Frank, Digs, Kit, Herman, Manong Ernie, Jojo, JV etc.
The Arroyo government claims that Brig. Gen. Danilo Lim, head of the elite Scout Rangers regiment, tried to talk AFP chief-of-staff Lt. Gen. Generoso Senga into withdrawing support from President Arroyo before Black Friday. Instead Gen. Senga took Brigadier Lim into custody.
This is a credible claim. It has now come out, during the current brouhaha in Fort Bonifacio (as I write this), that Marine Col. Ariel Querubin, also under custody for suspected anti-government sentiments, had planned with Lim to take their men to the Friday EDSA rally, without arms, to announce their withdrawal of support from the Arroyo government. Not quite a coup d’etat, but still an overt attempt to collapse the incumbent government.
Now, I have no problem with soldiers and officers, as well as ordinary civilian folks, becoming disenchanted with their governments and walking out on those governments. That was how the people of Eastern Europe (East Germany, Poland, Hungary, Czechoslovakia, Bulgaria, Albania) got rid of their communist regimes in 1989, after 40-45 years, and peacefully too, except in Romania.
But in our present situation, the opposite is being attempted: to ultimately install a communist regime, through the ruse of a people power exercise, financed by a disgraced president who, more than anything else, wants to be restored to the presidency so that he can unilaterally clear his name of the plunder charges pending against him. The communists plan to ride on Erap’s popularity to transit from the ‘transition council’ into a majority position in the second Erap government.
One can forgive Erap for his ignorance, that he is prepared to be a willing dupe of the communists, but one is amazed that more educated burgis types like Tita Cory and Triccie and Bettina and Josie and the Black and Blue Movement are so blinded by their antipathy towards Ate Glo that they willingly ally themselves with the communists to achieve their common goal.Tita Cory seems to have forgotten that in 1987 she naively freed from detention, over the objections of the military, Joma Sison and other top communist prisoners, apparently on the wishy-washy prayer that if she were nice to the communists, the communists would be nice to her.Never happened, of course. As soon as Joma reached Europe, he and his NDF organization in Utrecht waged a disinformation campaign among Europe’s generally leftist media, bad-mouthing Cory Aquino to make her look unworthy of the Nobel Peace Prize for which she had been nominated. That’s how Tita Cory missed being the first Filipino Nobel laureate.
The ideological naifs in the Black and Blue Movement, the Hyatt 10, as well as Triccie and Bettina and Josie and others, should be reminded that they are innocent vestal virgins compared to the seasoned communist revolutionaries that they have naively chosen to sleep with, politically speaking.Everyone seems to be unaware that their communist friends are not out to establish a more perfect Jeffersonian democracy. They are out to establish a Maoist dictatorship, with no political opposition parties, no private enterprise, no private media or schools or banks or industries or agriculture, no freedom of the press, no freedom of assembly, no freedom of speech.
When hundreds of thousands of student demonstrators massed at Tienanmen Square in Beijing in June 1989, demanding more political freedoms, they were driven away by the armored personnel carriers of the People’s Liberation Army, their machine-guns blazing, killing hundreds of students. And two of the few worldwide who applauded that massacre were Joma Sison of the CPP and Crispin Beltran of the KMU.
The Communist Golden Rule is: Do not do unto Us what We will do unto You once We are in power.The Roman Catholic Church in China consecrates its bishops subject to the approval of Beijing, not the Vatican To this day, Beijing does not allow a mere meditation cult, the Falun Gong, to hold public meetings. It is afraid that such a mass organization might form the nucleus of a political opposition.
Fidel Castro does not allow elections in Cuba on the grounds that they are “divisive.” In the late, unlamented Soviet Union, elections were allowed but the ballots contained only the names of candidates from the Communist Party. A voter approved or disapproved the Communist candidate by marking the ballot with a check or an X.But those who wrote a disapproving X must drop that ballot in a box separate from the box for approving ballots, in full view of electoral officials. Since most citizens did not want to risk losing their jobs or apartments or food ration cards or school slots for their children, they willingly voted for the Communist candidates. That was how the Communist Party always won 99.5% or more of the votes in communist countries.
There is no reason to believe that Joma’s CPP would be any less brazen.Under the concept of “democratic centralism,” all debates over policies are “centralized” within the inner sanctums of the Communist Party. Outside of these inner sanctums, there must be only total agreement and compliance.Bettina, your thriving food business would not be allowed in a Maoist or Sovietized economy.
In the Soviet Union, all means of production – even small restaurants, shoe repair shops, tobacco kiosks and taxis – were owned and operated by the state. This was based on Marx’s theory of surplus value that equated profit-making with exploitation. The reasoning is that no one should be allowed to make a profit from the basic needs of others….in your case, Bettina, the need to eat.In the Soviet economy, not only were all enterprises owned and operated by the state, they also had to follow the quotas set by an incredibly mammoth Kafkaesque bureaucracy in Moscow, called Gosplan, that dictated, for example, how many meals every restaurant was supposed to serve each year and how much you were to charge for them, as well as where you were to source your ingredients and at what prices you were to buy them for.
Even schools, Triccie, all government-owned and operated, had quotas on how many students to accept and how many students to pass to the next level each year. This was all part of central planning in the socialist economy, which was organized largely to prevent anyone from making a profit from the needs of others.China under Deng Xiao-ping at least had the good sense to reintroduce capitalism and the profit motive, starting in 1979, at first only in the rural areas, later even in the cities. Unlike in the Soviet Union, entrepreneurs in Dengist China were allowed to operate and to hire a maximum of seven employees each, without being accused of exploitation. Later, this ceiling was raised to fifty employees per entrepreneur. And still later, the ceiling was removed entirely. That was how China became, in the memorable words of Ka Roger, “a stinking capitalist country,” which Maoist Joma would never allow in a Communist Philippines.
Filipino communists are the most vocal oppositors to a national ID card. But in the Soviet Union, as in all communist countries, all citizens were required to carry an internal passport called propiska. This document, subject to random checks by the milicja, contained the name, photo and address of the citizen. No one was allowed to spend more than 72 hours in another address, without the knowledge and permission of the milicja or neighborhood police, even if that new address was another apartment on the same floor in the same building. Big Brother had to know at all times where you were.In the end, of course, everything collapsed in 1989 and 1991, from the accumulated weight of Communism’s failures, after 40 to 45 years in Eastern Europe, 74 years in the Soviet Union.
Burgis ladies and Magdalo gentlemen, do you really want to help impose this colossal catastrophe on your children and grandchildren, just because you hate Gloria Arroyo?I could go on and on, but you get the picture, naïve burgis ladies and idealistic Magdalo warriors. Oh, you will protest, but our communist friends are not that kind of communist, especially that Teddy Casino. He is so cute! But how do you know that? What do you know about communist ideology and methodologies?
Cute Maoists are still Maoists.Haven’t you seen the film “The East is Red!”? It is full of cute Maoist Red Guards, male and female, all waging serious Maoist revolution.
By Antonio C. AbayaFebruary 18,2006
The Arroyo government has given as the reason for the declaration of a state of national emergency a growing tactical alliance between young military officers and the Communist movement, in their common desire to force President Arroyo out of office.
I realize that among the liberals in the burgis community, it is fashionable to dismiss the communist bogeyman as a figment of someone’s imagination. Or that this concern is a throwback to the Cold War era, especially during the McCarthy witch hunts in the US of the 1950s, and should no longer be taken seriously half a century later.But in its Jan. 28 issue, the Philippine Daily Inquirer, the favorite newspaper of those who seek to overthrow the government, confirmed such a tactical alliance in a front-page story headlined Left-Right alliance vs GMA confirmed.Reported the Inquirer: “Disgruntled officers of the AFP and the PNP are reaching out to people’s organizations to get support for their grievances,” Bayan Muna Rep. Teodoro Casino told reporters….Casino said that as in the ouster of Presidents Marcos and Estrada in 1986 and 2001, the military’s withdrawal of support would be “crucial” to the removal of President Arroyo from power.“But their exact role in her ouster will be determined, to a large extent, by what the people’s movement can accept ,” Casino said.
This means – oh, you naïve warriors of the Magdalo – it will be the communist politburo, not you, who will decide what you can and cannot do in the struggle against President Arroyo. The same warning can be directed to the ideological naifs of the Black and Blue Movement, the Hyatt 10 and the likes of Tita Cory and Triccie and Bettina and Josie who have naively chosen to ally themselves with the communists in their efforts to unseat the embattled GMA.You – Magdalo idealists and burgis ideological naifs - will all be playing mere supporting roles.. The communists intend to play the central starring role because they want to dominate the subsequent ‘transition council,’ almost certainly the one being stitched together by Boy Morales, chief political lieutenant of Erap (who is the likely financier of all this as he was of the Oakwood Mutiny in July 2003) and co-founder in 1972 of the National Democratic Front (NDF), the political arm of the Communist Party of the Philippines (CPP). Even Joma Sison was supremely confident, in a recent message from Utrecht, that the Arroyo government would be replaced by this ‘transition council.’
Again, the liberals among the burgis will scoff at this interpretation, but the fact is that a communist insurgency is raging in this country with renewed vigor in 2006, and its goal remains the same as it was in 1949 and in 1969: the violent overthrow of the bourgeois democratic state and its replacement with a Marxist-Leninist “dictatorship of the proletariat,” in which the CPP of Joma Sison will be vested with monopoly of power. In other words, no opposition parties in Joma’s paradise state, let me remind Chiz, Peter Alan, Gilbert, Rolex, Devill, Frank, Digs, Kit, Herman, Manong Ernie, Jojo, JV etc.
The Arroyo government claims that Brig. Gen. Danilo Lim, head of the elite Scout Rangers regiment, tried to talk AFP chief-of-staff Lt. Gen. Generoso Senga into withdrawing support from President Arroyo before Black Friday. Instead Gen. Senga took Brigadier Lim into custody.
This is a credible claim. It has now come out, during the current brouhaha in Fort Bonifacio (as I write this), that Marine Col. Ariel Querubin, also under custody for suspected anti-government sentiments, had planned with Lim to take their men to the Friday EDSA rally, without arms, to announce their withdrawal of support from the Arroyo government. Not quite a coup d’etat, but still an overt attempt to collapse the incumbent government.
Now, I have no problem with soldiers and officers, as well as ordinary civilian folks, becoming disenchanted with their governments and walking out on those governments. That was how the people of Eastern Europe (East Germany, Poland, Hungary, Czechoslovakia, Bulgaria, Albania) got rid of their communist regimes in 1989, after 40-45 years, and peacefully too, except in Romania.
But in our present situation, the opposite is being attempted: to ultimately install a communist regime, through the ruse of a people power exercise, financed by a disgraced president who, more than anything else, wants to be restored to the presidency so that he can unilaterally clear his name of the plunder charges pending against him. The communists plan to ride on Erap’s popularity to transit from the ‘transition council’ into a majority position in the second Erap government.
One can forgive Erap for his ignorance, that he is prepared to be a willing dupe of the communists, but one is amazed that more educated burgis types like Tita Cory and Triccie and Bettina and Josie and the Black and Blue Movement are so blinded by their antipathy towards Ate Glo that they willingly ally themselves with the communists to achieve their common goal.Tita Cory seems to have forgotten that in 1987 she naively freed from detention, over the objections of the military, Joma Sison and other top communist prisoners, apparently on the wishy-washy prayer that if she were nice to the communists, the communists would be nice to her.Never happened, of course. As soon as Joma reached Europe, he and his NDF organization in Utrecht waged a disinformation campaign among Europe’s generally leftist media, bad-mouthing Cory Aquino to make her look unworthy of the Nobel Peace Prize for which she had been nominated. That’s how Tita Cory missed being the first Filipino Nobel laureate.
The ideological naifs in the Black and Blue Movement, the Hyatt 10, as well as Triccie and Bettina and Josie and others, should be reminded that they are innocent vestal virgins compared to the seasoned communist revolutionaries that they have naively chosen to sleep with, politically speaking.Everyone seems to be unaware that their communist friends are not out to establish a more perfect Jeffersonian democracy. They are out to establish a Maoist dictatorship, with no political opposition parties, no private enterprise, no private media or schools or banks or industries or agriculture, no freedom of the press, no freedom of assembly, no freedom of speech.
When hundreds of thousands of student demonstrators massed at Tienanmen Square in Beijing in June 1989, demanding more political freedoms, they were driven away by the armored personnel carriers of the People’s Liberation Army, their machine-guns blazing, killing hundreds of students. And two of the few worldwide who applauded that massacre were Joma Sison of the CPP and Crispin Beltran of the KMU.
The Communist Golden Rule is: Do not do unto Us what We will do unto You once We are in power.The Roman Catholic Church in China consecrates its bishops subject to the approval of Beijing, not the Vatican To this day, Beijing does not allow a mere meditation cult, the Falun Gong, to hold public meetings. It is afraid that such a mass organization might form the nucleus of a political opposition.
Fidel Castro does not allow elections in Cuba on the grounds that they are “divisive.” In the late, unlamented Soviet Union, elections were allowed but the ballots contained only the names of candidates from the Communist Party. A voter approved or disapproved the Communist candidate by marking the ballot with a check or an X.But those who wrote a disapproving X must drop that ballot in a box separate from the box for approving ballots, in full view of electoral officials. Since most citizens did not want to risk losing their jobs or apartments or food ration cards or school slots for their children, they willingly voted for the Communist candidates. That was how the Communist Party always won 99.5% or more of the votes in communist countries.
There is no reason to believe that Joma’s CPP would be any less brazen.Under the concept of “democratic centralism,” all debates over policies are “centralized” within the inner sanctums of the Communist Party. Outside of these inner sanctums, there must be only total agreement and compliance.Bettina, your thriving food business would not be allowed in a Maoist or Sovietized economy.
In the Soviet Union, all means of production – even small restaurants, shoe repair shops, tobacco kiosks and taxis – were owned and operated by the state. This was based on Marx’s theory of surplus value that equated profit-making with exploitation. The reasoning is that no one should be allowed to make a profit from the basic needs of others….in your case, Bettina, the need to eat.In the Soviet economy, not only were all enterprises owned and operated by the state, they also had to follow the quotas set by an incredibly mammoth Kafkaesque bureaucracy in Moscow, called Gosplan, that dictated, for example, how many meals every restaurant was supposed to serve each year and how much you were to charge for them, as well as where you were to source your ingredients and at what prices you were to buy them for.
Even schools, Triccie, all government-owned and operated, had quotas on how many students to accept and how many students to pass to the next level each year. This was all part of central planning in the socialist economy, which was organized largely to prevent anyone from making a profit from the needs of others.China under Deng Xiao-ping at least had the good sense to reintroduce capitalism and the profit motive, starting in 1979, at first only in the rural areas, later even in the cities. Unlike in the Soviet Union, entrepreneurs in Dengist China were allowed to operate and to hire a maximum of seven employees each, without being accused of exploitation. Later, this ceiling was raised to fifty employees per entrepreneur. And still later, the ceiling was removed entirely. That was how China became, in the memorable words of Ka Roger, “a stinking capitalist country,” which Maoist Joma would never allow in a Communist Philippines.
Filipino communists are the most vocal oppositors to a national ID card. But in the Soviet Union, as in all communist countries, all citizens were required to carry an internal passport called propiska. This document, subject to random checks by the milicja, contained the name, photo and address of the citizen. No one was allowed to spend more than 72 hours in another address, without the knowledge and permission of the milicja or neighborhood police, even if that new address was another apartment on the same floor in the same building. Big Brother had to know at all times where you were.In the end, of course, everything collapsed in 1989 and 1991, from the accumulated weight of Communism’s failures, after 40 to 45 years in Eastern Europe, 74 years in the Soviet Union.
Burgis ladies and Magdalo gentlemen, do you really want to help impose this colossal catastrophe on your children and grandchildren, just because you hate Gloria Arroyo?I could go on and on, but you get the picture, naïve burgis ladies and idealistic Magdalo warriors. Oh, you will protest, but our communist friends are not that kind of communist, especially that Teddy Casino. He is so cute! But how do you know that? What do you know about communist ideology and methodologies?
Cute Maoists are still Maoists.Haven’t you seen the film “The East is Red!”? It is full of cute Maoist Red Guards, male and female, all waging serious Maoist revolution.
SI Article on Global Financial Crisis
Social Democratic Principles Towards a New Financial Architecture
Preamble: General Principles Concerning Financial Markets and the Role of Government
The Socialist International reaffirms its longheld commitment to a global society founded in an economic system based on production, the fair distribution of wealth and the eradication of poverty and inequality. The SI reaffirms its decision of the XXII Congress in Sao Paulo, “Governance in a Global Society” and its decision, “Setting the global economy on a new path” of the XXIII Congress in Athens. The SI especially reiterates its proposal of a “United Nations Council for Sustainable Development”, to establish a global coordination mechanism - a new United Nations Security Council on Economic, Social and Environmental issues. The SI reaffirms that regulation, redistribution and public goods are the principles upon which the Welfare State is based and have now become the basis for a global order that is socially inclusive. One in which regulation has to be sustainable and effectively implemented; redistribution has to be socially fair; public goods have to be accessible for everyone. It is in this context of the real economy which places people at the centre of the process that our organization frames its proposals to deal with the global financial crisis.
1. Financial markets are not an end in themselves, but a means: they are supposed to perform certain vital functions which enable the real economy to be more productive:
a. Mobilising savings;
b. Allocating capital;
c. Managing Risk, transferring it from those less able to bear it to those more able.
It is hard to have a well-performing modern economy without a good financial system.
In the United States of America, financial markets have not performed these functions well:
a. They encouraged spendthrift patterns, which led to near-zero savings
b. They misallocated capital
c. They created risk, they did not manage it well, and they left huge risks with ordinary Americans, who are now bearing huge costs because of these failures
These problems have occurred repeatedly and are pervasive, evidence that the problems are systemic and systematic. And failures in financial markets have effects that spread out to the entire economy.
2. While markets are at the centre of every successful economy, markets only work well when private rewards are aligned with social returns. Incentives matter, but when incentives are distorted, we get distorted behaviour.
In spite of their failure to perform their key social functions, financial markets have garnered for themselves in the US and some other of the advanced industrial countries 30% or more of corporate profits—not to mention the huge compensation received by their executives.
3. Well-functioning markets require a balance between government and markets. Markets often fail, and financial markets have, on their own, failed in ways that have large systemic consequences. The deregulatory philosophy that has prevailed in many Western countries during the past quarter century has a one-sidedgrounding in economic theory or historical experience; modern economic theory explains why the government must take an active role, especially in regulating financial markets.
Good regulation can increase confidence of investors in markets and thus serve to attract capital to financial markets.
Government regulation is especially important because inevitably, when the problems are serious enough, there will be bail-outs; thus, government is, implicitly or explicitly, providing insurance. And all insurance companies need to make sure that either the premia they charge for the risks are commensurate with the risks or that the insured do not take actions which increase the likelihood of the insured against event occurring.
Key regulations, like the Glass Steagall Act, were repealed in the United States. In other cases, the regulatory structure did not keep up with changes in the financial structure. The international banking regulatory structures (Basel II) were biased towards the notion of self-regulation.
Bail-out has to have a persuasive founding. Financial markets have repeatedly mismanaged risk, at great cost to taxpayers and society.
When, a hundred years ago, Upton Sinclair depicted graphically the USA’s stockyards, and there was a revulsion against consuming meat, the industry turned to government for regulation, to assure consumers that meat was safe for consumption. Regulatory reform would help restore confidence in our financial markets.
4. But passing regulations is not enough. They have to be enforced.
The Fed had regulatory powers which it did not use. Those appointed to enforce the regulation succumbed to the same deregulatory philosophy that had led to the stripping away of regulation.
5. Innovation is important, but not all innovations make a positive social contribution. Those that do should be encouraged, and government may need to take a catalytic role.
Much of the innovation in recent years has been regulatory, accounting, and tax arbitrage, while financial markets, too oftenfailed to make innovations which would help individuals and our society manage risk better; in some instances, they have actually opposed such innovation. Historically, the government has played an important role in promoting key innovations.
6. The success of a market economy is based on competition. But firms strive to reduce competition. There is a need for strong competition laws with rigorous enforcement.
When a firm is bailed out because it is too big too fail, it is evidence that competition laws have not been effectively enforced. Now financial institutions have become so big that they are almost too big to save. And in the process of addressing the current crisis, we are creating ever larger financial institutions, sowing the seeds for problems down the line. The high fees and other abusive practices of credit card companies is a result of anti-competitive behaviour. There is a strong case for global supervision (colleges of supervision).
7. The success of a market economy requires good information—transparency. But there are often incentives, especially in managerial capitalism (where there is a separation of ownership and control), for a lack of transparency.
Problems of lack of transparency are pervasive in financial markets, and they have resisted improvements, such as more transparent disclosure of the costs of stock options. Stock options in return have provided incentives for accounting that increases reported profits—incentives for distorted and less transparent accounting. Financial institutions created products that were so complex and non-transparent that not even the firms that created them fully understood all of their implications. They put liabilities off-balance sheet, making it difficult to assess accurately their net worth.
8. Problems of information asymmetries are pervasive in financial markets.
Securitisation and many of the other “innovations” have increased these asymmetries of information. The recognition of the importance of the limitations of information has played an important role in the current crisis.
9. Financial markets have often exploited the uninformed and the poorly educated.
This is part of the reason for the need for strong consumer and investor protection. It is not a surprise that the problems first occurred among the least educated and lower income individuals. There was extensive predatory lending, and financial markets resisted laws that restricted these abusive practices.
10. Ordinary individuals cannot be expected to monitor the financial position of banks. Such monitoring is a public good—a public responsibility. And the government should provide protection for the public against its failure to perform its function adequately. There needs to be comprehensive deposit insurance.
11. Without such deposit insurance there can be runs on the banking system. The argument that providing such deposit insurance gives rise to moral hazard cannot be ignored but should not prevent governments from solving the problem. If the government provides insurance, it must make sure that the insured against event does not occur—just as a fire insurance company typically requires commercial buildings that it insures to have sprinklers.
12. Financial behaviour is affected by many other parts of our tax and legal structures. Financial market reform cannot be fully separated from reform in these other laws.
Tax laws encouraged leveraging. Excess levels of leverage, and especially the fear of the consequences of rapid deleveraging of financial institutions contributed significantly to the rapid spread of the crisis. New bankruptcy laws that made it more difficult for the poor to discharge their debts may have encouraged predatory lending practices.
13. Those who impose costs on others (externalities) must be forced to pay those costs. This is not just a matter of equity; it is a matter of economic efficiency. More generally, costs of regulation and bailing out of financial systems are part of the costs of financial intermediation. There is a presumption that efficiency requires that these costs be borne within the sector.
In environmental economics, there is a basic principle, called the polluter pays principle. Wall Street has polluted our economy with toxic mortgages. It should now pay for the cleanup.
14. The role of the Fed is not just to maintain price stability but also to promote growth and high employment. A single-minded focus on price stability may actually lead to greater economic instability. Economic stability requires a sound financial system.
The Fed and central bankers around the world were focusing on second order inefficiencies associated with low inflation, as problems of financial market instability grew—with the resulting real loss of output and economic inefficiency that were so much larger.
15. There are large distributional consequences of financial policies (both macro-economic and regulatory). They cannot be delegated to technocrats but are an essential part of the political process.
While the economy needs a well-functioning financial system, what is in the interests of financial markets may not be in the interests of workers or small businesses. There are trade-offs. The Fed’s responsibility is not to maximise the well-being of financial markets; their mandate is broader. It is important that those broader interests be better reflected in institutional design.
The principles of a regulatory agenda:
Objectives
Regulations are required to:
(a) ensure the safety and soundness of individual financial institutions and the financial system as a whole;
(b) protect consumers;
(c) maintain competition;
(d) ensure access to finance for all; and
(e) maintain overall economic stability.
Design
1. There are always going to be asymmetries between regulators and the regulated—the regulated are likely to be better paid, and there are important asymmetries of information. But that does not mean that there cannot be effective regulation. The pay and skills of those innovating new drugs may be different from those that test their safety and efficacy; yet no one would suggest that such testing is either infeasible or undesirable.
But well-designed regulatory structures take into account those asymmetries—some regulations are easier to implement and more difficult to circumvent.
2. There is always going to be some circumvention of regulations. But that doesn’t mean that one should abandon regulations.
A leaky umbrella may still provide some protection on a rainy day. No one would suggest that because tax laws are often circumvented, we should abandon them. Yet, one of the arguments for the repeal of Glass-Steagall was that it was, in effect, being circumvented. The response should have been to focus on the reasons that the law was passed in the first place, and to see whether those objectives, if still valid, could be achieved in a more effective way.
3. But it does mean that one has to be very sensitive in the design of regulations. Simple regulations may be more effective, and more enforceable, than more complicated regulations. Regulations that affect incentives may be more effective, and more enforceable, than regulations directed at the behaviours themselves.
4. And it also means that regulations have to constantly change, both to keep up with changes in the external environment and to keep up with innovations in regulatory arbitrage.
5. There are important distinctions between financial institutions that are central to the functioning of the economy system, whose failure would jeopardise the functioning of the economy and who are entrusted with the care of ordinary citizens’ money, and those that provide investment services to the very wealthy. The former includes commercial banks and pension funds. These institutions should be moreheavily regulated to protect our economic system and the individuals whose money they are supposed to be taking care of. Consenting adults should be allowed to do what they like, so long as they do not hurt others. There needs to be a strong protection of these core financial institutions—they cannot lend money to or purchase products from this “risk” sector, unless such products have been individually approved by the responsible national (or regional authority (which could be called a “Financial Products Safety Commission”). (In the subsequent discussion, we will refer to these financial institutions as highly regulated financial entities.)
The fact that two investment banks have converted themselves into bank holding companies should be a source of worry. They argued that this would provide them a more stable source of finance. But they should not be able to use insured deposits to finance their risky activities. Evidently, they thought they could. It means that either prudential regulation of commercial banks has been so weakened that there is little difference between the two; or that they believe that they can use depositor funds in their riskier activities. Neither interpretation is comforting.
6. There should be a presumption that financial markets work fairly well, and as a result there are no free lunches to be had. Financial innovations that are defended as reducing transactions costs, but instead lead to increased fees for financial institutions, should be suspect.
Many new financial products (derivatives) were sold as lowering transactions costs and providing new risk arbitrage opportunities. However, pricing was based on information provided by existing assets, and they succeeded in generating huge fees.
7. Models used to provide risk assessment are only as good as the assumptions that are used in their implementation. In the past, there have been repeated failures in underestimating risks and correlations (e.g. among assets, between credit and interest rate risks) and of small probability events (what should be once in a century events occur every ten years). Risk models used by highly regulated entities and those that regulate them must be alert to these problems and to systemic risks.
8. Modern financial markets are complex, with complex interrelations among different institutions of different kinds, evidenced in the current crisis. There is a need for a regulatory authority, a Financial Markets Stability Authority, to assess over risks. While the Financial Products Safety Commission looks at individual products and judges their appropriateness for particular classes of purchasers, the Financial Markets Stability Commission looks at the functioning of the entire financial system and how it would respond to various kinds of shocks. Such a Commission should have identified, for instance, the risk posed by the breaking of the housing bubble. All of the regulatory authorities (those regulating securities, insurance, and banking) should report to the FMSC. We have seen how all financial institutions are interconnected, and how an insurance firm became a systemic player. Similar functions can be performed by different kinds of institutions. There needs to be oversight over the entire system to avoid regulatory arbitrage. In the international financial architecture there are several institutions (FSF, BIS, IMF) on which to build this kind of a “Financial Products Safety Commission” on a global level.
Part of the problem in the current crisis is inadequate enforcement of existing regulations. This means that we have to balance the positive effects of financial services and financial innovation withrobust regulatory systems, where gaps in enforcement are transparent. Relatively simple regulatory systems (see point 3 above and specific examples below) may be easier to implement and more robust. There needs to be sensitivity to the risk of regulatory capture. It may also be an optionto have duplicative regulatory systems: the costs of a mistake can overwhelm the extra costs of regulation. And one must guard against regulatory competition—allowing a choice of regulators can lead to a race to the bottom.
9. While guarding against the mistakes of the past is no insurance for avoiding problems in the future, what is remarkable about manyfinancial systems is that they have beenso immune from learning in the past. Similar problems didarise repeatedly: the underestimation of small probability risks, the underestimation of correlations, the lack of attention to problems of liquidity and systemic risk, problems posed by failures of counterparty risk. In the future, any regulatory system has to pay special attention to these seemingly persistent failures in markets’ risk judgements. It also must be sensitive to other aspects of market failures, especially if effective remediation is not undertaken, such as the underestimation of certain risks by rating agencies.
Regulatory capture is not just a matter of “buying” regulators, or even of “revolving doors,” but also of the capture of ideas and mindsets. If those who are supposed to regulate the financial markets approach the problem only from financial markets’ perspectives, they will not provide an adequate check and balance. But much of the inadequacy of current regulations and regulatory structures is the result of financial markets’ political influence, in many countries through campaign contributions. These deeper political reforms are an essential part of any successful regulatory reform.
A New Regulatory Framework
1. Improved transparency and disclosure, in a form that is understandable to most investors.
But while transparency and disclosure has been at the centre of those calling for better regulation, it does not suffice and is more complicated than often seems the case.
a. The US prided itself on having transparent financial markets, criticising others (such as those in East Asia) for their failures. It has turned out that that is not the case.
b. Even disclosing the terms of the financial products may not have helped; some are so complicated that not even their originators fully understood the risks entailed.
c. Greater reliance on standardised products rather than tailor-made products may increase transparency of the economy. It reduces the information burden on market participants, and it enhances competition (differentiating products is one of the ways that firms work to reduce the force of competition). There is a cost (presumably tailor-made products can be designed to better fit the needs of the purchasers), but the costs are probably less than the benefits—especially since there is evidence that in many cases there was less tailoring than there should have been.
d. Some years ago, there was resistance by those in the financial industry to the introduction of more transparent and better auctions as a way of selling Treasury bills.
e. More recently, there was resistance to requirements for more transparent disclosure of the costs of stock options. Companies often do not report other aspects of executive compensation in a transparent way and typically do not disclose the extent to which executive compensation is correlated with performance. (Too often, when stock performance is poor, stock options are replaced with other forms of compensation, so that there is in effect little real incentive pay.) Stock options provide incentives for corporate executives to provide distorted information. This may have played an important role in the current financial crisis. At the very least, there should be a requirement for more transparent disclosure of stock options.
f. Hedge funds and private equity funds have contributed in exacerbating structural deficiencies of financial markets. Hedge Funds need to achieve high leverages and therefore use high risk strategies which can contribute in destabilising financial markets. Hedge funds and private equity funds therefore must be monitored and regulated more effectively. The key issues for us are obligations to disclose asset and ownership structures, more stringent requirements to inform investors about risks, the limitation of excess debt financing and adequate taxation rules. The prohibition of naked short selling – at least temporarily – can also contribute in stabilising financial markets.
g. Mark-to-market accounting was supposed to provide better information to investors about banks economic position. But now, there is a concern that this information may contribute to exacerbating the downturn. While financial markets used to boast about the importance of the “price discovery function” performed by markets, they now claim that market prices sometimes do not provide good information, and using transactional prices may provide a distorted picture of a bank’s economic position. The problem is only partially with mark-to-market accounting; it also has to do with the regulatory system, which requires the provision of more capital when the value of assets is written down. (See the discussion below.) Not using mark-to-market not only provides opportunities for gaming (selling assets that have increased in value while retaining those that have decreased, so that they are valued at purchase price), but it also provides incentives for excessive risk taking. Realising that there is no perfect information system, it may be desirable to have both sets of information provided.
h. There needs to be clear disclosure of conflicts of interest, and if possible, they should be restricted. (See below.)
i. No off-balance sheet transactions should be allowed for highly regulated financial entities.
2. Regulating incentives is essential. The current system encourages excessive risk taking, a focus on the short term, and bad accounting practices.
a. A key reform is moving away from rewarding executives through stock options. (See the discussion above.)
b. Any incentive pay should long term—or least longer term than the current horizon. Bonuses should be based on performance over at least a five year period. If part of compensation is based on shorter term performance, there need to be strong clawback provisions.
c. Any incentive pay system should not induce excessive risk taking, so that there should be limited asymmetries in the treatment of gains and losses.
d. Any pay system that is claimed to be incentive based should be demonstrably so. Average compensation and compensation of individual managers should be shown tobe related to performance.
e. Those originating mortgages or other financial products should bear some of the consequences for failed products. There should be a requirement that mortgage originators retain at least a 20% equity share.
f. It is clearly problematic for rating agencies to be paid by those that they rate and to sell consulting services on how ratings can be improved. Yet it is not obvious how to design alternative arrangements, which is why in many sectors inspections are publicly provided (Food and Drug Administration). Competition among rating agencies can have perverse incentives—a race to the bottom. At the very least, rating agencies need to be more highly regulated. A government rating agency couldbe established.
g. There is a clear conflict of interest when a mortgage originator also owns the company that appraises house values. This should be forbidden.
i. Competition is essential to the functioning of a market economy.
a. Financial institutions have become too big to fail. They have grown so large that many are almost too big to save. In many communities, small businesses have but one or two lenders to whom they can turn. There has been a failure of effective enforcement of competition policy. But in response to the current crisis, competition has been eroded even further, especially in investment banking, and banks have become even larger. When the crisis is passed, emphasis has to be on re-establishing more competition.
b. Banks have earned fees that are well in excess of competitive levels on credit cards. There is clear evidence of anti-competitive behaviour. Competition needs to be created in credit cards. There needs to be more disclosure and transparency in fees charged to both consumers and merchants. Anti-competitive practices have to be restricted. Retailers that wish to allow discounts to those that pay cash should be allowed to do so.
j. Exploitive and risky practices of the financial sector need to be curbed.
a. These include pay-day loans, predatory lending, and rent-a-furniture and similar scams.
b. There needs to be a usury law (and this also applies to credit cards) limiting the effective rate of interest paid by users of the financial facility.
c. In the mortgage sector, variable rate mortgages in which payments can vary significantly (as opposed to variations in maturity) could be forbidden, at least for all individuals whose income is below a certain threshold. Practices which result in excessive transaction costs (entailing frequent refinancing of loans or mortgages) could be proscribed.
d. Speed limits should be imposed on the rate of expansion of assets.
As an alternative, increased capital requirements/increased provisioning requirements and/or increased premia on deposit insurance on banks that increase their lending (lending in any particular category) at an excessive rate can provide incentives to discourage such risky behaviour.
e. Derivatives and similar financial products should neither be purchased nor produced by highly regulated financial entities, unless they have been approved for specific uses by a financial products safety commission (FPSC) and unless their use conforms to the guidelines for usage established by the FPSC.
k. Commercial banks and similar institutions have to have adequate capital and provisioning of risks
a. Capital adequacy standards/provisions (reserves) have to be designed to be countercyclical. Otherwise, there is a risk that they will contribute to cyclical fluctuations. As asset values decrease in a downturn, it can force cutbacks in lending, further exacerbating the downturn; and in the boom, the asset price increases allow more lending. On both sides, cyclical fluctuations are amplified.
b. Capital adequacy standards alone do not suffice; indeed, increasing capital adequacy standards may lead to increased risk taking. Moreover, while government provision of capital may provide a buffer against bankruptcy, so long as management focuses on the returns to themselves and non-governmental shareholders, depending on the form of the provision of capital, risks of excessive risk taking may not be mitigated. Capital adequacy standards are not a substitute for close supervision of the lending and risk practices of banks. Banks will have an incentive to engage in regulatory and accounting arbitrage, and regulators must be alert to this possibility. They must have sufficient authority to proscribe such behaviour. Bad lending practices may increase in cyclical downturns; this necessitates closer supervision at such times.Regulators have to be particularly sensitive to the risks of increasing leverage in booms.
c. Regulators need to be aware of the risks posed by various practices within the financial system which contribute to risk and cyclicity (cyclical movements in leverage, pricing, rating of rating agencies). These can be offset by countercyclical capital adequacy/provisioning requirements, cyclically adjusted limits on loan-to-value ratios, and/or rules to adjust the values of collateral for cyclical price variations.
d. Better designed provision requirements may help stabilise the financial system. Banks should be required to make compulsory provisions for bond defaults, which would increase with asset prices. Banks should putup provisions (reserves) when loans are disbursed rather than when repayments (or, rather the lack of repayments) are expected.
l. The regulatory system has to be designed to facilitate effective enforcement and to resist capture.
a. Financial regulation needs to be comprehensive; otherwise funds will flow through the least regulated part. The challenge is to achieve this kind of regulation without stifling positive financial innovation.Transparency requirements on part of the system may help ensure the safety and soundness of that particular part of the system but would provide little information about systemic risks. This has become particularly important as different institutions have begun to perform similar functions. That is why there is a need for a financial markets stability commission, having oversight of the overall financial system and providing integrated regulation of every part of the system. Such a commission would also look carefully at the interrelations among the parts of the system—how exchange rate exposure of firms to whom banks lend may expose banks to foreign exchange risk. Especially in developing countries, bank regulations may restrict uncovered foreign exchange positions. Both this and the 1997-1998 crisis exposed the importance of counterparty risk, and regulators will need to take this into account more than they have in the past. A Financial Markets Stability Commission should be particularly attentive to the systemic risk which arises when many banks use similar models, inducing similar actions at the same time.
b. Those who are affected by the failure of regulation—workers who lose their jobs, retirees who see their pensions diminished, taxpayers who have to bear the costs of bail-outs—should have a large voice in any regulatory structure.
Preamble: General Principles Concerning Financial Markets and the Role of Government
The Socialist International reaffirms its longheld commitment to a global society founded in an economic system based on production, the fair distribution of wealth and the eradication of poverty and inequality. The SI reaffirms its decision of the XXII Congress in Sao Paulo, “Governance in a Global Society” and its decision, “Setting the global economy on a new path” of the XXIII Congress in Athens. The SI especially reiterates its proposal of a “United Nations Council for Sustainable Development”, to establish a global coordination mechanism - a new United Nations Security Council on Economic, Social and Environmental issues. The SI reaffirms that regulation, redistribution and public goods are the principles upon which the Welfare State is based and have now become the basis for a global order that is socially inclusive. One in which regulation has to be sustainable and effectively implemented; redistribution has to be socially fair; public goods have to be accessible for everyone. It is in this context of the real economy which places people at the centre of the process that our organization frames its proposals to deal with the global financial crisis.
1. Financial markets are not an end in themselves, but a means: they are supposed to perform certain vital functions which enable the real economy to be more productive:
a. Mobilising savings;
b. Allocating capital;
c. Managing Risk, transferring it from those less able to bear it to those more able.
It is hard to have a well-performing modern economy without a good financial system.
In the United States of America, financial markets have not performed these functions well:
a. They encouraged spendthrift patterns, which led to near-zero savings
b. They misallocated capital
c. They created risk, they did not manage it well, and they left huge risks with ordinary Americans, who are now bearing huge costs because of these failures
These problems have occurred repeatedly and are pervasive, evidence that the problems are systemic and systematic. And failures in financial markets have effects that spread out to the entire economy.
2. While markets are at the centre of every successful economy, markets only work well when private rewards are aligned with social returns. Incentives matter, but when incentives are distorted, we get distorted behaviour.
In spite of their failure to perform their key social functions, financial markets have garnered for themselves in the US and some other of the advanced industrial countries 30% or more of corporate profits—not to mention the huge compensation received by their executives.
3. Well-functioning markets require a balance between government and markets. Markets often fail, and financial markets have, on their own, failed in ways that have large systemic consequences. The deregulatory philosophy that has prevailed in many Western countries during the past quarter century has a one-sidedgrounding in economic theory or historical experience; modern economic theory explains why the government must take an active role, especially in regulating financial markets.
Good regulation can increase confidence of investors in markets and thus serve to attract capital to financial markets.
Government regulation is especially important because inevitably, when the problems are serious enough, there will be bail-outs; thus, government is, implicitly or explicitly, providing insurance. And all insurance companies need to make sure that either the premia they charge for the risks are commensurate with the risks or that the insured do not take actions which increase the likelihood of the insured against event occurring.
Key regulations, like the Glass Steagall Act, were repealed in the United States. In other cases, the regulatory structure did not keep up with changes in the financial structure. The international banking regulatory structures (Basel II) were biased towards the notion of self-regulation.
Bail-out has to have a persuasive founding. Financial markets have repeatedly mismanaged risk, at great cost to taxpayers and society.
When, a hundred years ago, Upton Sinclair depicted graphically the USA’s stockyards, and there was a revulsion against consuming meat, the industry turned to government for regulation, to assure consumers that meat was safe for consumption. Regulatory reform would help restore confidence in our financial markets.
4. But passing regulations is not enough. They have to be enforced.
The Fed had regulatory powers which it did not use. Those appointed to enforce the regulation succumbed to the same deregulatory philosophy that had led to the stripping away of regulation.
5. Innovation is important, but not all innovations make a positive social contribution. Those that do should be encouraged, and government may need to take a catalytic role.
Much of the innovation in recent years has been regulatory, accounting, and tax arbitrage, while financial markets, too oftenfailed to make innovations which would help individuals and our society manage risk better; in some instances, they have actually opposed such innovation. Historically, the government has played an important role in promoting key innovations.
6. The success of a market economy is based on competition. But firms strive to reduce competition. There is a need for strong competition laws with rigorous enforcement.
When a firm is bailed out because it is too big too fail, it is evidence that competition laws have not been effectively enforced. Now financial institutions have become so big that they are almost too big to save. And in the process of addressing the current crisis, we are creating ever larger financial institutions, sowing the seeds for problems down the line. The high fees and other abusive practices of credit card companies is a result of anti-competitive behaviour. There is a strong case for global supervision (colleges of supervision).
7. The success of a market economy requires good information—transparency. But there are often incentives, especially in managerial capitalism (where there is a separation of ownership and control), for a lack of transparency.
Problems of lack of transparency are pervasive in financial markets, and they have resisted improvements, such as more transparent disclosure of the costs of stock options. Stock options in return have provided incentives for accounting that increases reported profits—incentives for distorted and less transparent accounting. Financial institutions created products that were so complex and non-transparent that not even the firms that created them fully understood all of their implications. They put liabilities off-balance sheet, making it difficult to assess accurately their net worth.
8. Problems of information asymmetries are pervasive in financial markets.
Securitisation and many of the other “innovations” have increased these asymmetries of information. The recognition of the importance of the limitations of information has played an important role in the current crisis.
9. Financial markets have often exploited the uninformed and the poorly educated.
This is part of the reason for the need for strong consumer and investor protection. It is not a surprise that the problems first occurred among the least educated and lower income individuals. There was extensive predatory lending, and financial markets resisted laws that restricted these abusive practices.
10. Ordinary individuals cannot be expected to monitor the financial position of banks. Such monitoring is a public good—a public responsibility. And the government should provide protection for the public against its failure to perform its function adequately. There needs to be comprehensive deposit insurance.
11. Without such deposit insurance there can be runs on the banking system. The argument that providing such deposit insurance gives rise to moral hazard cannot be ignored but should not prevent governments from solving the problem. If the government provides insurance, it must make sure that the insured against event does not occur—just as a fire insurance company typically requires commercial buildings that it insures to have sprinklers.
12. Financial behaviour is affected by many other parts of our tax and legal structures. Financial market reform cannot be fully separated from reform in these other laws.
Tax laws encouraged leveraging. Excess levels of leverage, and especially the fear of the consequences of rapid deleveraging of financial institutions contributed significantly to the rapid spread of the crisis. New bankruptcy laws that made it more difficult for the poor to discharge their debts may have encouraged predatory lending practices.
13. Those who impose costs on others (externalities) must be forced to pay those costs. This is not just a matter of equity; it is a matter of economic efficiency. More generally, costs of regulation and bailing out of financial systems are part of the costs of financial intermediation. There is a presumption that efficiency requires that these costs be borne within the sector.
In environmental economics, there is a basic principle, called the polluter pays principle. Wall Street has polluted our economy with toxic mortgages. It should now pay for the cleanup.
14. The role of the Fed is not just to maintain price stability but also to promote growth and high employment. A single-minded focus on price stability may actually lead to greater economic instability. Economic stability requires a sound financial system.
The Fed and central bankers around the world were focusing on second order inefficiencies associated with low inflation, as problems of financial market instability grew—with the resulting real loss of output and economic inefficiency that were so much larger.
15. There are large distributional consequences of financial policies (both macro-economic and regulatory). They cannot be delegated to technocrats but are an essential part of the political process.
While the economy needs a well-functioning financial system, what is in the interests of financial markets may not be in the interests of workers or small businesses. There are trade-offs. The Fed’s responsibility is not to maximise the well-being of financial markets; their mandate is broader. It is important that those broader interests be better reflected in institutional design.
The principles of a regulatory agenda:
Objectives
Regulations are required to:
(a) ensure the safety and soundness of individual financial institutions and the financial system as a whole;
(b) protect consumers;
(c) maintain competition;
(d) ensure access to finance for all; and
(e) maintain overall economic stability.
Design
1. There are always going to be asymmetries between regulators and the regulated—the regulated are likely to be better paid, and there are important asymmetries of information. But that does not mean that there cannot be effective regulation. The pay and skills of those innovating new drugs may be different from those that test their safety and efficacy; yet no one would suggest that such testing is either infeasible or undesirable.
But well-designed regulatory structures take into account those asymmetries—some regulations are easier to implement and more difficult to circumvent.
2. There is always going to be some circumvention of regulations. But that doesn’t mean that one should abandon regulations.
A leaky umbrella may still provide some protection on a rainy day. No one would suggest that because tax laws are often circumvented, we should abandon them. Yet, one of the arguments for the repeal of Glass-Steagall was that it was, in effect, being circumvented. The response should have been to focus on the reasons that the law was passed in the first place, and to see whether those objectives, if still valid, could be achieved in a more effective way.
3. But it does mean that one has to be very sensitive in the design of regulations. Simple regulations may be more effective, and more enforceable, than more complicated regulations. Regulations that affect incentives may be more effective, and more enforceable, than regulations directed at the behaviours themselves.
4. And it also means that regulations have to constantly change, both to keep up with changes in the external environment and to keep up with innovations in regulatory arbitrage.
5. There are important distinctions between financial institutions that are central to the functioning of the economy system, whose failure would jeopardise the functioning of the economy and who are entrusted with the care of ordinary citizens’ money, and those that provide investment services to the very wealthy. The former includes commercial banks and pension funds. These institutions should be moreheavily regulated to protect our economic system and the individuals whose money they are supposed to be taking care of. Consenting adults should be allowed to do what they like, so long as they do not hurt others. There needs to be a strong protection of these core financial institutions—they cannot lend money to or purchase products from this “risk” sector, unless such products have been individually approved by the responsible national (or regional authority (which could be called a “Financial Products Safety Commission”). (In the subsequent discussion, we will refer to these financial institutions as highly regulated financial entities.)
The fact that two investment banks have converted themselves into bank holding companies should be a source of worry. They argued that this would provide them a more stable source of finance. But they should not be able to use insured deposits to finance their risky activities. Evidently, they thought they could. It means that either prudential regulation of commercial banks has been so weakened that there is little difference between the two; or that they believe that they can use depositor funds in their riskier activities. Neither interpretation is comforting.
6. There should be a presumption that financial markets work fairly well, and as a result there are no free lunches to be had. Financial innovations that are defended as reducing transactions costs, but instead lead to increased fees for financial institutions, should be suspect.
Many new financial products (derivatives) were sold as lowering transactions costs and providing new risk arbitrage opportunities. However, pricing was based on information provided by existing assets, and they succeeded in generating huge fees.
7. Models used to provide risk assessment are only as good as the assumptions that are used in their implementation. In the past, there have been repeated failures in underestimating risks and correlations (e.g. among assets, between credit and interest rate risks) and of small probability events (what should be once in a century events occur every ten years). Risk models used by highly regulated entities and those that regulate them must be alert to these problems and to systemic risks.
8. Modern financial markets are complex, with complex interrelations among different institutions of different kinds, evidenced in the current crisis. There is a need for a regulatory authority, a Financial Markets Stability Authority, to assess over risks. While the Financial Products Safety Commission looks at individual products and judges their appropriateness for particular classes of purchasers, the Financial Markets Stability Commission looks at the functioning of the entire financial system and how it would respond to various kinds of shocks. Such a Commission should have identified, for instance, the risk posed by the breaking of the housing bubble. All of the regulatory authorities (those regulating securities, insurance, and banking) should report to the FMSC. We have seen how all financial institutions are interconnected, and how an insurance firm became a systemic player. Similar functions can be performed by different kinds of institutions. There needs to be oversight over the entire system to avoid regulatory arbitrage. In the international financial architecture there are several institutions (FSF, BIS, IMF) on which to build this kind of a “Financial Products Safety Commission” on a global level.
Part of the problem in the current crisis is inadequate enforcement of existing regulations. This means that we have to balance the positive effects of financial services and financial innovation withrobust regulatory systems, where gaps in enforcement are transparent. Relatively simple regulatory systems (see point 3 above and specific examples below) may be easier to implement and more robust. There needs to be sensitivity to the risk of regulatory capture. It may also be an optionto have duplicative regulatory systems: the costs of a mistake can overwhelm the extra costs of regulation. And one must guard against regulatory competition—allowing a choice of regulators can lead to a race to the bottom.
9. While guarding against the mistakes of the past is no insurance for avoiding problems in the future, what is remarkable about manyfinancial systems is that they have beenso immune from learning in the past. Similar problems didarise repeatedly: the underestimation of small probability risks, the underestimation of correlations, the lack of attention to problems of liquidity and systemic risk, problems posed by failures of counterparty risk. In the future, any regulatory system has to pay special attention to these seemingly persistent failures in markets’ risk judgements. It also must be sensitive to other aspects of market failures, especially if effective remediation is not undertaken, such as the underestimation of certain risks by rating agencies.
Regulatory capture is not just a matter of “buying” regulators, or even of “revolving doors,” but also of the capture of ideas and mindsets. If those who are supposed to regulate the financial markets approach the problem only from financial markets’ perspectives, they will not provide an adequate check and balance. But much of the inadequacy of current regulations and regulatory structures is the result of financial markets’ political influence, in many countries through campaign contributions. These deeper political reforms are an essential part of any successful regulatory reform.
A New Regulatory Framework
1. Improved transparency and disclosure, in a form that is understandable to most investors.
But while transparency and disclosure has been at the centre of those calling for better regulation, it does not suffice and is more complicated than often seems the case.
a. The US prided itself on having transparent financial markets, criticising others (such as those in East Asia) for their failures. It has turned out that that is not the case.
b. Even disclosing the terms of the financial products may not have helped; some are so complicated that not even their originators fully understood the risks entailed.
c. Greater reliance on standardised products rather than tailor-made products may increase transparency of the economy. It reduces the information burden on market participants, and it enhances competition (differentiating products is one of the ways that firms work to reduce the force of competition). There is a cost (presumably tailor-made products can be designed to better fit the needs of the purchasers), but the costs are probably less than the benefits—especially since there is evidence that in many cases there was less tailoring than there should have been.
d. Some years ago, there was resistance by those in the financial industry to the introduction of more transparent and better auctions as a way of selling Treasury bills.
e. More recently, there was resistance to requirements for more transparent disclosure of the costs of stock options. Companies often do not report other aspects of executive compensation in a transparent way and typically do not disclose the extent to which executive compensation is correlated with performance. (Too often, when stock performance is poor, stock options are replaced with other forms of compensation, so that there is in effect little real incentive pay.) Stock options provide incentives for corporate executives to provide distorted information. This may have played an important role in the current financial crisis. At the very least, there should be a requirement for more transparent disclosure of stock options.
f. Hedge funds and private equity funds have contributed in exacerbating structural deficiencies of financial markets. Hedge Funds need to achieve high leverages and therefore use high risk strategies which can contribute in destabilising financial markets. Hedge funds and private equity funds therefore must be monitored and regulated more effectively. The key issues for us are obligations to disclose asset and ownership structures, more stringent requirements to inform investors about risks, the limitation of excess debt financing and adequate taxation rules. The prohibition of naked short selling – at least temporarily – can also contribute in stabilising financial markets.
g. Mark-to-market accounting was supposed to provide better information to investors about banks economic position. But now, there is a concern that this information may contribute to exacerbating the downturn. While financial markets used to boast about the importance of the “price discovery function” performed by markets, they now claim that market prices sometimes do not provide good information, and using transactional prices may provide a distorted picture of a bank’s economic position. The problem is only partially with mark-to-market accounting; it also has to do with the regulatory system, which requires the provision of more capital when the value of assets is written down. (See the discussion below.) Not using mark-to-market not only provides opportunities for gaming (selling assets that have increased in value while retaining those that have decreased, so that they are valued at purchase price), but it also provides incentives for excessive risk taking. Realising that there is no perfect information system, it may be desirable to have both sets of information provided.
h. There needs to be clear disclosure of conflicts of interest, and if possible, they should be restricted. (See below.)
i. No off-balance sheet transactions should be allowed for highly regulated financial entities.
2. Regulating incentives is essential. The current system encourages excessive risk taking, a focus on the short term, and bad accounting practices.
a. A key reform is moving away from rewarding executives through stock options. (See the discussion above.)
b. Any incentive pay should long term—or least longer term than the current horizon. Bonuses should be based on performance over at least a five year period. If part of compensation is based on shorter term performance, there need to be strong clawback provisions.
c. Any incentive pay system should not induce excessive risk taking, so that there should be limited asymmetries in the treatment of gains and losses.
d. Any pay system that is claimed to be incentive based should be demonstrably so. Average compensation and compensation of individual managers should be shown tobe related to performance.
e. Those originating mortgages or other financial products should bear some of the consequences for failed products. There should be a requirement that mortgage originators retain at least a 20% equity share.
f. It is clearly problematic for rating agencies to be paid by those that they rate and to sell consulting services on how ratings can be improved. Yet it is not obvious how to design alternative arrangements, which is why in many sectors inspections are publicly provided (Food and Drug Administration). Competition among rating agencies can have perverse incentives—a race to the bottom. At the very least, rating agencies need to be more highly regulated. A government rating agency couldbe established.
g. There is a clear conflict of interest when a mortgage originator also owns the company that appraises house values. This should be forbidden.
i. Competition is essential to the functioning of a market economy.
a. Financial institutions have become too big to fail. They have grown so large that many are almost too big to save. In many communities, small businesses have but one or two lenders to whom they can turn. There has been a failure of effective enforcement of competition policy. But in response to the current crisis, competition has been eroded even further, especially in investment banking, and banks have become even larger. When the crisis is passed, emphasis has to be on re-establishing more competition.
b. Banks have earned fees that are well in excess of competitive levels on credit cards. There is clear evidence of anti-competitive behaviour. Competition needs to be created in credit cards. There needs to be more disclosure and transparency in fees charged to both consumers and merchants. Anti-competitive practices have to be restricted. Retailers that wish to allow discounts to those that pay cash should be allowed to do so.
j. Exploitive and risky practices of the financial sector need to be curbed.
a. These include pay-day loans, predatory lending, and rent-a-furniture and similar scams.
b. There needs to be a usury law (and this also applies to credit cards) limiting the effective rate of interest paid by users of the financial facility.
c. In the mortgage sector, variable rate mortgages in which payments can vary significantly (as opposed to variations in maturity) could be forbidden, at least for all individuals whose income is below a certain threshold. Practices which result in excessive transaction costs (entailing frequent refinancing of loans or mortgages) could be proscribed.
d. Speed limits should be imposed on the rate of expansion of assets.
As an alternative, increased capital requirements/increased provisioning requirements and/or increased premia on deposit insurance on banks that increase their lending (lending in any particular category) at an excessive rate can provide incentives to discourage such risky behaviour.
e. Derivatives and similar financial products should neither be purchased nor produced by highly regulated financial entities, unless they have been approved for specific uses by a financial products safety commission (FPSC) and unless their use conforms to the guidelines for usage established by the FPSC.
k. Commercial banks and similar institutions have to have adequate capital and provisioning of risks
a. Capital adequacy standards/provisions (reserves) have to be designed to be countercyclical. Otherwise, there is a risk that they will contribute to cyclical fluctuations. As asset values decrease in a downturn, it can force cutbacks in lending, further exacerbating the downturn; and in the boom, the asset price increases allow more lending. On both sides, cyclical fluctuations are amplified.
b. Capital adequacy standards alone do not suffice; indeed, increasing capital adequacy standards may lead to increased risk taking. Moreover, while government provision of capital may provide a buffer against bankruptcy, so long as management focuses on the returns to themselves and non-governmental shareholders, depending on the form of the provision of capital, risks of excessive risk taking may not be mitigated. Capital adequacy standards are not a substitute for close supervision of the lending and risk practices of banks. Banks will have an incentive to engage in regulatory and accounting arbitrage, and regulators must be alert to this possibility. They must have sufficient authority to proscribe such behaviour. Bad lending practices may increase in cyclical downturns; this necessitates closer supervision at such times.Regulators have to be particularly sensitive to the risks of increasing leverage in booms.
c. Regulators need to be aware of the risks posed by various practices within the financial system which contribute to risk and cyclicity (cyclical movements in leverage, pricing, rating of rating agencies). These can be offset by countercyclical capital adequacy/provisioning requirements, cyclically adjusted limits on loan-to-value ratios, and/or rules to adjust the values of collateral for cyclical price variations.
d. Better designed provision requirements may help stabilise the financial system. Banks should be required to make compulsory provisions for bond defaults, which would increase with asset prices. Banks should putup provisions (reserves) when loans are disbursed rather than when repayments (or, rather the lack of repayments) are expected.
l. The regulatory system has to be designed to facilitate effective enforcement and to resist capture.
a. Financial regulation needs to be comprehensive; otherwise funds will flow through the least regulated part. The challenge is to achieve this kind of regulation without stifling positive financial innovation.Transparency requirements on part of the system may help ensure the safety and soundness of that particular part of the system but would provide little information about systemic risks. This has become particularly important as different institutions have begun to perform similar functions. That is why there is a need for a financial markets stability commission, having oversight of the overall financial system and providing integrated regulation of every part of the system. Such a commission would also look carefully at the interrelations among the parts of the system—how exchange rate exposure of firms to whom banks lend may expose banks to foreign exchange risk. Especially in developing countries, bank regulations may restrict uncovered foreign exchange positions. Both this and the 1997-1998 crisis exposed the importance of counterparty risk, and regulators will need to take this into account more than they have in the past. A Financial Markets Stability Commission should be particularly attentive to the systemic risk which arises when many banks use similar models, inducing similar actions at the same time.
b. Those who are affected by the failure of regulation—workers who lose their jobs, retirees who see their pensions diminished, taxpayers who have to bear the costs of bail-outs—should have a large voice in any regulatory structure.
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