The Christmas holidays afforded me to continue reading the book “Why Nations Fail” by Daren Acemoglu and James Robinson without interruption. On the chapter entitled “Understanding Prosperity and Poverty” and its historical origins, this is where we asked the question, why are other nations rich, while the rest of us are poor? What I like so much in this book is their research of the history of world economies, which many of us cannot even comprehend because they were never taught in our schools.
For instance, few people realize that Mexico was far richer than the United States 500 years ago. Sure, the Spanish Conquistadores subjugated them and just over a hundred years go wage the US-Mexican War in 1846, where Mexico was defeated. Today, Mexico is the poor neighbor of the United States, where its borders are fenced because America fears poor Mexicans crossing the Rio Grande River.
Authors Acemoglu and Robinson came up with their own theory on why some nations are rich and others remain poor, and it is the link between inclusive economic institutions and political institutions and prosperity. As they pointed out in the book: “Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few and that fail to protect property rights or provide incentives for economic activity.” This is exactly what is happening in the Philippines today.
Unfortunately, both authors Acemoglu and Robinson did not include the Philippines in their studies nor mentions us in their book, which is probably why they came over to Manila a few weeks ago. But here at home, there is a clear cut example that has become a national concern…. And that is the Hacienda Luisita, were the reality is…it is, as the authors would say, “structured to extract resources from the many by the few and that fail to protect property rights or provide incentives for economic activity.”
Worse was when then President Cory Aquino signed the Comprehensive Agrarian Reform Law (CARL) that involved anyone who had lands anywhere in this country, but exempted her own Hacienda Luisita from being distributed like the rest of us lesser mortals, opting for a new phrase called Stock Distribution Option (SDO). This SDO was eventually struck down by the Supreme Court, which caught the ire of the Aquino family and resulted in the impeachment of Chief Justice Renato Corona, when President Aquino came into power. It was sheer vengeance.
Twenty-six years ago, the Filipino people fed up by an “extractive” one-man rule where only President Ferdinand E. Marcos and his minions or cronies benefited from their rule, the Filipino people rallied by the Catholic Church then led by Jaime Cardinal Sin, supported the widow of the late Senator Ninoy Aquino Jr. to oust the conjugal dictatorship of the Marcoses. In late February 1986, the EDSA “People’s Power” Revolt was born. This type of revolt would reverberate around the world and even spread towards the Middle East in what was known as the “Arab Spring.”
It resulted in the removal of Tunisia’s Ben Ali, Egypt’s Hosni Mubarak, Yemeni President Ali Abdullah Saleh and Libya’s strongman Col. Muammar Gadaffi, who refused to step down and started killing innocent Libyans. Eventually he was tracked down and was killed by his own people. The conflagration of the Arab Spring continues today in Syria where more than 20,000 Syrians have already died and a million people displaced. Pundits believe this conflict could spread into Armageddon. From a peaceful people’s revolt, the legacy of EDSA has now resulted in deaths elsewhere in the world where people want to be free while their rulers hold on to their despotic rule.
But while the Philippines looks politically stable today, we are still far from the dream of EDSA because certain personalities belonging to the opposition then (many of them are now with the Liberal Party) hijacked the people’s revolt and put in place the 1987 Constitution that created a new political elite, which is clearly present in the Senate today. This has resulted in a vicious cycle of personality politics where no one can enter with the exceptions of a few. This can only end if we changed the 1987 Constitution.
As Acemoglu and Robinson said, “The synergies between extractive economic and political institutions create a vicious cycle where extractive institutions, once in place, tend to persist. Similarly, there is a virtuous circle associated with inclusive economic and political institutions.” Today we suffer from a vicious cycle of poverty, because there is also a vicious cycle of political opportunists called political dynasties holding on to power. For as long as our political leaders refuse to change our political system, it just might trigger a Filipino spring. Let’s hope that the year 2013 will be the year of real change.
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Email: vsbobita@mo-pzcom.com or vsbobita@gmail.com