Inexorable

One hundred eighty-four aspirants for seats in the Senate have filed their papers. That does not mean we have a surfeit of choices.

I tried my best to monitor all the public statements made by those wanting to be senator. Not one of them so far commits to bring down the national debt during their tenure. I will vote for the first candidate who does.

Our  national debt now stands at about P15 trillion. That eats up a significant portion of public revenues – although probably not as large as the portion eaten out by corruption.

We actually borrow to service existing debt. This serves to raise out outstanding debt obligations further. The debt has become an inexorable force in our nation’s life.

Unfortunately, any politician who commits to bring down the national debt will never win an elective post. Bringing down the national debt will require a lot of fiscal discipline. It means raising taxes, trimming subsidy programs and eliminating wastage. Voters will not respond positively to these.

When the Philippines experienced a debt crisis in the early 80s, the event nearly killed our economy. We literally had to pack dollars in suitcases to pay for our essential oil imports. No one trusted our credit.

The debt crisis was so crippling, we sought a bailout program from the IMF and the World Bank. The program was approved only if we adopted painful “structural adjustments,” including raising revenue capacity and imposing an austerity program. The lenders wanted to be sure we evolved the capacity to pay back debt.

During the period of “structural adjustment,” government found itself with no money for infrastructure investment. Everything simply deteriorated. Our ports and airports became laughing stock. Bridges could not be built. New roadways had to wait.

Our entire logistics system simply froze. This led to congestion everywhere, from roads to ports. Such an environment discouraged new investments. In turn, lack of investments meant higher unemployment levels and more poverty.

The suffering was well distributed. Under the terms of a strict austerity program, government froze public sector wages. Government workers saw their purchasing power shrink before their eyes. This led to a massive demoralization in the bureaucracy.

Among the greatest casualties of the period of austerity was our educational system. The learning deficit afflicted our young the most. Our human resources became uncompetitive. Our schools continue to fail us to this day.

The debt crisis of the early 80s condemned us to a period of low growth. As we stagnated, nearly every other country in our part of the world expanded at a healthy clip. The variance in the pace of economic expansion soon became too obvious. We were proclaimed the "Sick Man of Asia.”

We had to pull ourselves up by our bootstraps. We imposed such unpopular measures as the VAT to ensure revenue generation. We privatized what could be better run under private hands. We devised creative new programs that invited private investment in improving our infrastructure. Slowly, and under constant attack from populists whose solution to every price issue was to nationalize and subsidize, we recovered our credit ratings.

Those who served as Finance Secretaries during this period of unwinding from the debt crisis deserve to be honored with monuments. Their programs were extremely unpopular. But they persisted.

As we raised enough revenues to finance development, the politicians were quick enough to spend public funds on freebies. We introduced a variety of cash transfer programs that bought popularity even as these were prone to a huge volume of leakage.

Instead of improving the efficiency of our farm systems through, for instance, enlarging land retention limits, we chose the easier path of subsidies. Giving out free irrigation, seeds and fertilizer do deliver short-term relief. But they do not cure the basic inefficiency of our farms, trapped as they are at subsistence level production methods. Furthermore, they aggravate our addiction to debt.

Electoral democracy does not help cure debt addiction. It is a system that helps elect into office those who promise voters even more freebies. It penalizes statesmen who aspire to wean nations away from debt and towards effective fiscal self-reliance.

Nothing is easier than growing the debt. All it requires is for government to continue spending beyond its means and supplementing revenue with borrowing.

Nothing is more difficult than reducing a nation’s debt load. It requires rallying the population behind a program of fiscal discipline. It requires building a national ethic of delayed gratification. That is just short of impossible.

Debt addiction is by no means unique to the Philippine case.

The US is now about $35 trillion in debt. Yet none of the major parties and presidential contenders have bothered to promise fiscal discipline. The economic programs laid out by the Donald Trump and Kamala Harris campaigns are different only in the scale they would add to the existing debt. By the reckoning of most economists, Trump’s promises will cause US debt to shoot through the roof.

We cannot expect politicians here to talk about fiscal discipline. That would require tighter controls on spending and better programs for improving government revenues. Talking about them would be suicidal in an election year.

Therefore, expect our politicians to confine themselves talking nonsense. Some will promise easier access to electric vehicles. Others will praise tuition-free education, even if this has inflicted the most serious damage on our already decrepit educational system.