Not all pork is bad?

Posted in Brownman's Posts by uniffors on the November 30th, 2013
    Not all pork is bad?

by Mario M. Galang

I hope I got it wrong – I mean my reading of the Supreme Court ponencia declaring the Priority Development Assistance Fund as unconstitutional. But, is the Court saying that not all pork is necessarily bad, even if it says PDAF is truly bad?

By implication, yes; and that much is implied when the Court defined its key terms. (Without even intending to, the definition has also put an end to the “confusion of meanings” that attended the pork debate. No more are we in pork Babel.)

“Pork barrel” is not defined explicitly, but “pork barrel system” is, and in so doing the Court hints strongly at what it means by “pork barrel.”
“Pork barrel system” is “the collective body of rules and practices that govern the manner by which lump-sum, discretionary funds, primarily intended for local projects, are utilized through the respective participations of the Legislative and Executive branches of government, including its members.”

I’ve taken note of the reference to “funds” that are: 1) lump-sum discretionary; 2) primarily intended for local projects; and 3) used through the participation of the Legislature or the Executive, including their members. All these three features combined describe or define our controversial “pork”.

This pork variety is proudly Pinoy, not so unlike our adobo. It bears the marks of “local concept and legal history,” as the ponencia acknowledges. Unique unto its own, it distinguishes itself from the universally understood lexical “pork barrel” that such authority as the Oxford English Dictionary (OED) accords entry, as: “The state’s financial resources regarded as a source of distribution to meet regional expenditure; the provision of funds (in U.S., Federal funds) for a particular area achieved through political representation or influence.”

OED’s pork shares with pork barrel adobo at least one common feature: the use of funds for local or areal projects. Otherwise, OED’s pork hardly cares if the central funds are lump-sum or used by whoever in congress or the executive branch. In that sense, the adobo variety is restrictive and covers a narrower scope.

Definitions are only as good as the function they do in your scheme of things. Since the Court wants to establish the constitutionality of PDAF, “pork barrel” defined at this level lacks the precision to serve the purpose.
Hence, the term “congressional pork barrel” – “defined as a kind of lump-sum, discretionary fund wherein legislators, either individually or collectively organized into committees, are able to effectively control certain aspects of the fund’s utilization through various post-enactment measures and/or practices.”

Note that the use of fund is further qualified with “through various post-enactment measures and/or practices.” The operative word is “post-enactment”- meaning, after the budget bill is enacted into law, or the stage at which the president executes the budget.

The description has now taken the unmistakable shape of PDAF. Defined as such, congressional pork barrel is intrinsically illegal, as if it was born with unconstitutional genes. Now, here’s the catch.

Any salient point missing disqualifies an item for the “congressional pork barrel” label. PDAF qualifies, not because it is lump-sum per se; but, as Chief Justice Maria Lourdes Sereno pointed out, its “infirmity is brought about by the confluence of (1) sums dedicated to multiple purposes; (2) requiring post-enactment measures; (3) participated in, not by the Congress, but by its individual Members.”

Point 1 is precisely the lump-sum nature of the fund. The “post-enactment measures” cited in Point 2 are those that require, say, the agency implementing a PDAF-funded project to submit to Congress a priority list of beneficiaries 90 days from effectivity of the budget law – thus allowing Congress to join in the execution of the budget, in violation of the principle of separation of powers as the Constitution provides. For Point 3, one example is when individual lawmakers identify projects under PDAF, which become binding to the implementing agency.

The flipside of precision is exception or exclusion. Limiting modifiers in a definition may tend to stretch the list of exemptions. A few pages into the ponencia, the Court writes: “In a more technical sense, “Pork Barrel” refers to an appropriation of government spending meant for localized projects and secured solely or primarily to bring money to a representative’s district.” This pork looks more like OED’s pork as cited above. By definition, it “fails” the Court’s congressional pork barrel test – is it legal?

The Court defined PDAF into extinction. It was swift and easy and just. What is there to replace it? Trust our lawmakers to come out with innovations of their own. With the Court’s doctrinal definitions, the bounds of constitutionality are now clearer. They would know from this experience what to heed, and not among these is greed.

    Galang is a fellow of Action for Economic Reforms.

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Posted in Brownman's Posts by uniffors on the November 26th, 2013


My colleague Manuel Buencamino calls it the biggest reconstruction project in the Philippines after World War II. President Noy Aquino (PNoy) calls it a “comprehensive rehabilitation program.”

Typhoon Yolanda has brought incalculable, terrible costs. Two weeks after the most powerful storm in more than a century ripped central Philippines, more than 5200 people have died, more than a thousand are still missing, and scores of thousands are recuperating from physical injury and emotional trauma.

The calculation of economic losses brought about by Typhoon Yolanda’s devastation varies widely. The International Business Times (UK edition) provides some information on the economic impact:

CEDIM Forensic Disaster, based in Germany estimates that losses will range between US$8 billion and US$19 billion.
Another group, Kinetic Analysis Corp. places the economic costs at between US12 billion and US15 billion.
Economic Planning Secretary Arsenio Balisacan estimates that the reconstruction costs can reach US$5.8 billion.

In short, the amount for rehabilitation is staggering. But as I will explain later, the resources can be mobilized without necessarily overburdening the economy. The important point is this: The rehabilitation program is an opportunity to lay the foundation for post-Yolanda all-round, sustainable development.

In this context of recovering from the devastation brought about by the super typhoon, we can apply loosely (even literally!) Joseph Schumpeter’s “gale of creative destruction.” Yolanda destroyed the old, and it is up to us as a people, not only the policymakers, to create a new one. We hope that what we rebuild, to quote Schumpeter again, will “revolutionize the economic structure” and bring in “the new methods of production or transportation, the new markets, the new forms of industrial organization.”

The PNoy administration has created a “task group” for the comprehensive rehabilitation program, composed of Cabinet members and coordinated by Energy Secretary Carlos Jericho Petilla. The priority programs consist of shelter and reconstruction, power restoration, livelihood and employment, resettlement and psychosocial care, environmental protection, and resource generation and allocation. In the same vein, the National Economic and Development Authority (NEDA) is tasked to prepare a unified plan, which will integrate the rehabilitation programs and projects of different agencies.

From the description above, we can observe that the “task group” is basically made up of the whole Cabinet. That is, the Aquino administration for the remainder of its term will focus its energy and attention on the post-disaster program.

The administration has correctly identified the core programs. Of course. they are general categories that are part of any template on recovery and rehabilitation. And any program cannot offer sure-fire solutions,

Allow me, nonetheless, to identify and emphasize some areas, which are essential for the success of the rehabilitation plan.

First, the plan is an opportunity not only to rehabilitate and rebuild the provinces that were hard hit by Typhoon Yolanda. The reconstruction plan must be a national one. To repeat, now is the moment to “revolutionize the economic structure.”

In addition, tens of thousands of victims have left their homes and have become internal refugees, evacuating to urban centers to start life all over again. This suggests that the scope of the plan cannot be limited to the damaged areas.

In another area, the restoration of power is not a quick fix. The power shortage extends to many parts of the archipelago. Further, we cannot discount a national energy crisis in the medium term. This entails hard decisions that will address the market failure in the energy sector.

Second, jobs have to be created. In the near term, giving cash to victims to do relief and rehabilitation work is a good step. The massive infrastructure rebuilding will also result in creating jobs, skilled and unskilled. But why stop there? After all, the administration is committed to inclusive growth, in which the creation of quality jobs is the cornerstone.

Third, employment generation—creating jobs of higher productivity and expanding the number of wage-workers—is linked to industrial and technology policy. The government through the Department of Trade and Industry has a program on expanding and diversifying manufacturing through new forms of industrial policy. This program, however, remains low key. It is high time we placed prominently on the national agenda industrial and technology policy, which is tied to job creation. In this regard, we welcome the technical assistance of multilateral organizations and donor countries,especially those in East Asia, towards doing industrial policy right.

Fourth, industrial and technology policy has new substance and forms. It is not just about picking winners; it is also about putting in place the disciplining mechanisms to prevent abuse of discretion. It is also about collaboration between government and the private sector to jointly diagnose problems, coordinate actions, and discover new ways of doing things.

Moreover, industrial and technology policy must adapt to an unfortunate reality in the Philippines—that we will continue facing horrible natural disasters. In this sense, developing local green technology to address disaster reduction and management and climate change can be the lynchpin of such policy. The advantages of indigenous green technology include its labor intensiveness and its dynamic comparative advantage (given that the technology is relatively new, even to advanced countries).

Last but not least, the rehabilitation plan will obviously entail huge resources. This can strain the government’s fiscal capacity, but this problem is not a binding one. The Department of Finance and the Bureau of Internal Revenue have performed well in steadily increasing the tax effort. The combination of Kim Henares’s tax administration reforms and the passage of the sin tax reforms symbolizes confidence in government’s revenue performance.

To be sure, more revenue measures have to be put in place, all the more made pronounced by the expenditure demand for rehabilitation. It is thus an imperative for Congress to pass the bill on reforming mineral taxation and another bill on rationalizing fiscal incentives. On top of this, depending on PNoy’s political capital, he may ask Congress to reform the specific tax on petroleum, which has been eroded through the years because of non-aadjustment to inflation.

Notwithstanding the increase in tax effort and the proposed tax reforms, government cannot avoid borrowing to finance the rehabilitation program. A word of caution though: It is better to borrow domestically than externally. A heavy inflow of foreign loans leads to a currency appreciation, which in turn weakens the real sector and thereby undermines the goal of inclusive growth.

We have heard it many times, but it has been recently articulated by Kim Henares, that slow development in the Philippines is attributed to our weak sense of nationhood. Typhoon Yolanda has moved the Filipinos, rich and poor, to act as one. Let us seize this moment to sustain national action. Let us turn disasters like Yolanda into a “gale of creative destruction.”

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What ought to be

Posted in Brownman's Posts by uniffors on the November 18th, 2013

What ought to be
Filomeno S. Sta. Ana III

Some of us are dismayed over the behavior of blaming and bitching government for the slow, disorganized, or powerless response to the Typhoon Yolanda devastation.

Here’s a sample of Facebook comments that I liked:

• Please, if you are not doing anything to help, just shut up. We are all hurting, especially those in the affected areas. Let us unite in helping in any way we can. Criticizing, spreading false stories, predicting failure and all that negative stuff have got to stop.
• I hope all those know-it-all critics of the typhoon relief efforts sit down together and produce a magic master plan for the survivors. I’ve been waiting days for them to stop bitching and to come up with an alternative to what the government is doing.
• The damage from Yolanda is incalculable. The worst is psychical. The aftermath has made bitching a national pastime.

Don’t get me or us wrong.

First, everyone is not faultless. Even PNoy. Recall that he criticized the local government of Tacloban, expressing doubts over its preparedness. In times of great distress and disaster, emotional outbursts are difficult to control. In fact, they are better released.

Second, criticisms are necessary. Government is not omniscient. Criticisms make government awake and responsive.

But the type of criticism we have to avoid is one that weakens the collective effort to provide relief and rehabilitation to the suffering millions.

Some criticisms or complaints stem from the thinking of what ought to be. Government must or should do this or do that. Dapat ganito, dapat ganyan.

What ought to be is the best situation; it is the ideal. But the ideal is not the real world. We face too many constraints to achieve our objectives. Apply this to the response to the devastation caused by Typhoon Yolanda: The information and logistics failure overwhelm the people on the ground. Without information, infrastructure, and logistics, we can expect chaos.

Thus, attributing the absence of government’s presence as a cause of the worsening situation is misplaced. Government’s invisibility in some areas is but the effect of an objective problem—information and infrastructure facilities having been knocked off, leading to inefficiency and miscoordination.

It is also true that in remote areas, government cannot be found. But this has been the case since time immemorial. It is thus a constraint in the context of the ongoing relief and rehabilitation.

Another example of the “what-ought-to-be syndrome” is the tendency of some, particularly the foreign commentators, to compare the Philippines’ poor response to that of advanced countries like Japan. In other words, we ought to be doing what Japan is doing. Again, that is the ideal, but far from real. How can we become a Japan that soon?

This reminds me of the weakness of the most incisive analysis of Douglass North on the role of institutions, which earned him the Nobel laureate. North and his colleagues distinguish between countries (developing ones) that have limit access orders—characterized by corruption, rent-seeking and oligarchic rule—and countries (the advanced market economies) that have open access orders. So what ought to be for developing countries is to achieve open access orders. But North et al. so far cannot provide the concrete answers how to get there.

When next time, we say government must do this and must do that, we better exercise prudence and caution. Let us be sensitive to the constraints. Let us also acknowledge our own constraint that we ourselves do not have enough information that will be the basis of the most appropriate response.

But below is one example where our commentary can be most helpful to the relief and rehabilitation effort. Note that the writer EJ Galang, a young, internationally awarded creative professional, avoids saying we must do this or must do that.

To my friends in government, I know it’s a tall order, but can we expect a transparency report, an accounting of the donations that are meant for relief. I know it’s a hard task but this recent expose made the people lose its confidence on how the government keeps track of the people’s money. It will do the government good if you can restore a little bit of that trust.

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The final solution

Posted in Manuel Buencamino by uniffors on the November 3rd, 2013

“It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” – Abraham Maslow

Mama gave her 12 year old child a laptop because he needs it for school. One day she catches him watching porn. She freaks. So she installs all sorts of parental controls in the laptop. But the kid is a horny techie and breaks through mama’s walls easily. 

Mama catches the kid again. This time she is super freaked and takes the laptop away.  

“Absolutely no more internet for you until you are 18,” she says.
“But I need it for school, mama.”

 “Not anymore,” she replies, “I’m moving you to another high school where they don’t use the internet.”

“You’re moving me to Flintstones High?”

“Yes, because as far as I’m concerned that’s the only way to keep you away from porn,” she said with finality. 

Later that evening mama is watching the news and she learns about Janet Napoles. She is aghast. 

“My God! Those crooks should be jailed!” 

Cynical papa who is sitting beside her on the couch replies,
“Honey, you can jail those crooks but others will just take their place.” 

“But we cannot tolerate corruption. We have to do something,” she protests.

Papa replies, “You could ask the government to put in stricter controls.” 

“Good idea,” she says. 

She gathered her friends the following day.

“I’m sure you saw the news. You must be as outraged as I am by the Napoles scam,” she said. 

“Yes, how awful,” they replied. “We have to do something about it. We can’t have our children growing up in that kind of world.”  

Someone stood up and said, “Let’s make our voices heard. Let’s march. Let’s call for plugging the leaks and jailing the crooks.” And they all began to chant, “Plug the leaks, plug the leaks, jail the crooks, jail the crooks.” 

The problems of the world were solved and they all went home happy. Over dinner, mama told papa about the meeting. 

“But you’ve been overtaken by events,” he said   

“What do you mean?” she asked. 

“The administration announced it is adding stricter controls,” he told her.

“That’s great news!” she exclaimed.

He replied, “I hate to be the one to tell you this but I’m pretty sure crooks will still find a way to get their hands on the money.” 

Mama was appalled. She called another meeting to tell her friends the ugly reality she learned from papa. 

“It seems that we can’t eliminate stealing just like that,” she told them.

“What do we do now?” they asked each other. 

“We need to learn more about the issue,” one observed. 

“Let’s invite experts to explain it to us,” another proposed. 

And so experts were invited to a series of merienda lectures. Scholars from academe, political analysts, economists, lawyers, politicians, clerics, business and civil society leaders, communists, columnists, and anybody who had an opinion on anything showed up. And they lectured. And they ate. Between bites, one said this, the other said that, and on and on and on. There were so many opinions expressed and so many nuances pointed out that no one came out any wiser, only fatter from gorging on too many meriendas. 

Halfway through the merienda lecture series, mama told her group, “No more lectures! I have a simple solution. Let’s just take away the money!” 

“That’s right!” the group replied. And they began to chant,
“Take away the money! Take away the money!”  

At long last the final solution to the problem of corruption was found. Take away the money. Everyone would be going home happy and self-satisfied. And then it happened. 

There is always, in any gathering, someone who has to say the most uncomfortable thing at the worst possible time. She said, “Take away the money, take away the laptop. That’s how we solve problems?”

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