Populism does not fight poverty

I have been getting text messages congratulating me for writing the speech delivered by Oscar Lopez at the Foreign Correspondents Association of the Philippines (FOCAP) last Thursday evening. I wish I did. The truth is the draft I prepared was totally discarded days before the event. I saw a copy of the speech just hours before it was delivered. And so, there is also no truth to the story that I mistakenly gave Mr. Lopez a copy of my column that he dutifully read that night.

When I heard that the Palace wanted the speechwriter fired, I didn’t feel threatened at all. But I asked around who did write the speech. No one among the staff would own it because as it turned out, it was Mr. Lopez himself who decided it was time to pour his heart out. Since there was no way any of us could fire the CEO, we decided we would just look for the waiter who gave Mr. Lopez a glass of red wine that evening, instead of a glass of water.

Seriously, it just so happened that Mr. Lopez decided it was time to be as honest as he could be to himself and to the nation that night. Of course I warned him how media would go to town with his response to any Ate Glo question. My own paper headlined that he declared war on GMA. Another paper the next day said he "ate his words, somewhat" after we tried to clarify the context of what he said. Of course he neither declared war nor ate his words thereafter.

The speech he delivered is admittedly more daring than the one I prepared but not as daring as his responses in the open forum. Those who know him know it is his nature to speak his mind and had apparently been bristling quietly for some time at the restrictions that his high office in the group demands of him.

But what did he really say? He merely said what was begging to be said about how populist politics is leading the country to ruin. Politicians are wrong to think populism is a means of fighting poverty. On the contrary, populism aggravates poverty because it is an extremely short term approach. Politicians forget there is no such thing as a free lunch in economics, which means, someone somewhere sometime must pay the bill of populist decisions made today.

Beyond the sensational headline of Mr. Lopez declaring war on GMA, the most important message he had that evening is the need for government to be focused on job creation. In his mind, there can be no real job creation in this country without significant investments from the private sector. And these investments won’t come in unless government guarantees a fair return on investments and the stability of rules.

"Populist politics and economics, practiced Philippine-style," Mr. Lopez said, "discourages investments." This is because "our government, directly or through the so-called independent regulators try to cap the prices or rates that utilities can charge...(that) only serves to institutionalize the crab mentality that ensures that we will always have third world infrastructure."

He said that the private sector cannot "serve as the government’s unwilling surrogate in providing subsidies to the poor... If any segment of the consuming society must be subsidized, then government, not the private utility, should provide the subsidy."

Actually, that is not such a revolutionary or outrageous idea. Government has in fact recognized it in its contract with the MRT Consortium. Government thought the rate the MRT consortium wanted to charge to recover investments would make the fare beyond the reach of ordinary commuters. So government imposed its own rate but kept the consortium whole somehow. Even foreign governments subsidize their railroads and other essential services.

In the South Expressway however, government had even been more drastic. It imposed the policy of "users pay" meaning whoever uses the facility must pay full costs with no government subsidy. There were protests, of course, but government stood by the private sector investor.

In the case of Meralco and Maynilad, Mr. Lopez probably feels government royally screwed both. Meralco always gets the blame for high power rates because it is the entity that directly collects from the consumer. But not too many know that in the last series of rate adjustments, it is government-owned Transco that got the lion’s share of the increase – about 90 centavos per kwh compared to Meralco’s net of about 8.6 centavos.

Maynilad wanted the recognition of the extraordinary situation brought about by the 1997 devaluation of the peso from P26 to over P50 to one dollar, given that it pays for 90 percent of MWSS’s old debts. The delay in such recognition and failure to implement agreements fatally damaged the economic viability of the concession.

Still, Mr. Lopez did not single out GMA as being solely responsible for the sorry situation. The judiciary, regulators and even some members of Congress, he said, should share the blame in the deterioration of the country’s business climate.

Over the last weekend, Mr. Lopez got a lot of congratulatory messages from associates in the business sector. Well done, they all say, because those are things that should be boldly said. They suggested that they are behind him in this... but in reality not too many in the business sector have the balls, so to speak, to be anywhere near Mr. Lopez now. I imagine it is true they will be behind Mr. Lopez, but as always in a situation like this, way way behind.

I must confess that I am totally amazed at the turn of events. It must have been his degree in public administration from Harvard that made him realize that something’s terribly amiss in the way government is being managed. His deep interest in history, on the other hand, gave Mr. Lopez the ability to see current events from its timeless perspective. Maybe he figured that he owes himself, his children and his country this one last attempt to make sense of what his happening around us.

Maybe he is less jaded than I am, in the sense that he still entertains more than a flicker of hope that things could be turned around given the right national leader. He didn’t even totally rule out Ate Glo when he expressed hope that maybe in her second term, with no more reelection worries to preoccupy her, she could be the strong executive in a strong republic who will do what she must do even if doing so makes her unpopular.

Still, Mr. Lopez took me by surprise. I suppose once you hit 70, you no longer hesitate to do things you think you must do because tomorrow is always a big risk. You just may not get another chance again.

‘Pinoy joke’

This was passed on by Marilyn Mana-ay Robles.

Dad: Mabait ba ang boyfriend mo?

Anak: Yes, Daddy.

Daddy: Maka-Diyos?

Anak: Sobra Dad.

Daddy: Nasaan siya?

Anak: Nandoon sa simbahan, nagmimisa!

(Boo Chanco’s e-mail address is [email protected] )