I HAVE been enlightened by my readings and discussions with Dr. Leloy Claudio, Dr. Jesus Felipe, and Richard Heydarian (belated happy birthday to him), who I again thank for introducing me to both of them and inviting me on his show. On anti-corruption, we all agree on its importance and that corruption is reprehensible, and should be reduced as much as we can and punished. We also agree that anti-corruption is not enough and even worse, taking that solely as the end goal of policy can be harmful. As I put it, absence of malice does not equal virtue. As Dr. Claudio eloquently and rightly put it, rather than “kung walang corrupt, walang mahirap,” he turns it around into, if there were less mahirap, there would be less corruption. Read Heydarian and Claudio’s analysis on poverty and anti-corruption. While there was less corruption during Benigno Aquino III’s administration, the reduction was selective and not structural or sustained. For most people, the vagaries of dealing with frontline agencies did not change while services suffered. Remember no plates or licenses, and the MRT breaking down after the maintenance contract with Sumitomo expired, and it was given to an unqualified and undercapitalized crony company that cannibalized spare parts from other trains? To quote Sen. George Aiken, “People cannot be starved into democracy, they can be starved into dictatorships.” Claudio and Heydarian correctly set the priority between corruption and poverty. Deal with poverty and corruption is likely to be alleviated. Post-EDSA administrations mostly only targeted the latter and not very successfully. Why?
Anti-corruption is not enough as it does not constitute good government or economic policy, just a more honest one, important as that is. If one hires an honest but unqualified person to run a company, it will probably go bankrupt. Same if one hires a qualified but thoroughly corrupt person. You need both, and we have concentrated and with only sporadic success on anti-corruption, while having no industrial policy, poor delivery of government services, and a dearth of long-term planning and execution.
I don’t wish to repeat their articles and analysis, but please look them up, as they bring up facts and points worth analyzing, even if you don’t agree. At least test your views, though I do agree with them. The key point is we have gotten the anti-corruption and alleviating poverty argument backward, and like, the “Washington Consensus” mantra our unimaginative economists and policymakers believe with fervor and faith, anti-corruption is the dominant consensus. I agree with Claudio, Heydarian and Felipe: limiting policy to anti-corruption is wrong and harmful. We agree corruption is evil and poverty must be alleviated. The problem is making anti-corruption the ineffective centerpiece is not an end in itself or a sufficient stand-alone policy. This mindset has not led to sustained and structural reduction in corruption or poverty.
In most rankings, we are not world beaters in clean government or corruption. We are in the middle of the pack, and many of our much richer and successful neighbors rank at the same level for corruption. Yet, they have very successfully reduced poverty and achieved sustained economic growth and industrialization. Then go further and look at those who have made the leap with anti-poverty and prosperity, and eventually corruption there dropped continuously. Remember this old riddle: Which came first, the egg or the chicken? My officemates at Evercore used to laugh at my ribald retort — I want to be the rooster that you-know-what the hen to make the egg.
Rather than anti-corruption leading to a reduction in poverty — in effect “kung walang corrupt, walang mahirap,” data shows it is the other way around. As Claudio so eloquently, but more importantly, factually points out, a reduction in poverty often leads to a reduction in corruption. So, less poverty is the goal and reduced corruption is an additional benefit. Please read his work on that. I am presently reading his book “The Profligate Colonial” on our economic history and watching his interviews with Heydarian which are available on YouTube. The real point is that with less poverty comes less corruption, but the key to both is less poverty and economic growth, not anti-corruption as the sole or primary goal.
Our policies must be primarily aimed at quality economic growth (manufacturing and industrialization), which will lead to less poverty and more prosperity, and the result is usually less corruption. To again quote Senator Aiken, “People cannot be starved into democracy, they can be starved into dictatorships.”
Why do you see scant insider trading at the top global investment banks, versus the local ones? Pay. One at the former increasingly wonders if it’s worth the trouble given what he will give up if caught. The more you are paid, the easier it is to say no, and the opposite is also true. Whether in services, government or manufacturing, what makes ethical behavior easier to maintain and enforce? Increased prosperity and wealth. You don’t think the very high pay scales for government officials and workers in Singapore is not critical to anti-corruption and enables swift enforcement the few times they fall short? There will always be outliers, but they will be fewer and easier to prosecute, especially if not systemic.
When I wrote about the pay scales at the BSP as model for governance, my ornery fellow columnist Bobi Tiglao wrote a heated multicolumn retort, which in my view, reinforced my points, especially if one ignores his inaccurate and irrelevant ad hominem attacks, which I viewed as red herrings. He may use this as inspiration for more diatribes, especially since I approvingly refer to Heydarian, one of his many bete noires, but I bring it up to illustrate Dr. Claudio’s insight — less poverty is what leads to less corruption, so let’s move primarily on that, rather than concentrate on less corruption. It is not like the results of the last 50 years show anti-corruption as the main policy driver works to substantially and sustainably reduce corruption or poverty. Reduce poverty, and you will reduce corruption.
The author is an independent director of the state-run Maharlika Investment Corp.
