It’s corruption, teacher!

This is my response to the nine-page essay on the economy of former philippine President Gloria Macapagal-Arroyo that she addressed to P-Noy, her student and successor. Titled “It’s the economy, student,” GMA pointed out what she thought are wrong in the way P-Noy runs the country. I write this not to defend P-Noy but just to set some things straight, particularly on the economy, using government figures.

In her essay, GMA says that countless studies have shown that rapid increases in average incomes reduce poverty. She cited Stephan Klasen who wrote that “poverty reduction will be fastest in countries where average income growth is highest.” She then called attention to the 7.9 percent growth in the last quarter of her term, which she said capped 38 quarters of uninterrupted economic growth in her watch despite escalating global oil and food prices, two world recessions, Central and West Asian wars, megastorms and virulent global epidemics.

Basing on the experiences of our more successful neighboring economics in Asia, it is true that rapid increases in average incomes that are made possible with rapid economic growth causes their poverty incidence to disappear or brought down to more manageable level. But then the question is how rapid must the economy grow to achieve this intended result? In postwar Japan, that meant a sustained growth of 6 to 8 percent annually in its GDP for at least two or three decades and not just for a quarter or year like what happened in the last election year. In the seventies and thereafter, the newly industrializing economics of Singapore, Hong Kong, South Korea and Taiwan duplicated Japan’s economic miracle that also explained for the disappearance or cutting down of much of their poverty. Now China is doing even better with growth rates of about 10 percent annually. In contrast, how fast did the Philippine economy grow in the last ten years under Arroyo? It only averaged less than 5 percent a year.

As government statistics shows GMA’s less than 5 percent GDP growth performance was not enough to bring down the country’s poverty. Using the old method of computing poverty, the National Statistical Coordination Board shows that 33 percent of the population in 2000 were living in poverty. That was during last year of the short-lived Estrada administration. In 2009 under Arroyo’s watch, poverty incidence remains almost at the same rate. The new method of estimating poverty that the NSCB used gives a lower poverty incidence in 2009 but the same method when applied to the data in 2000 also gives almost the same level of poverty. This shows that poverty persisted at high level under GMA’s decade-long watch despite her contrary claims.

She also claimed to have generated 9 million jobs in her time. Given the changes made in the definition of the employed and the unemployed in 2005, it is not easy to prove or disprove this claim. Suffice it to say that after the change in the definitions, the unemployment rates were now 3 to 4 percentage points lower compared with rates before the change. But looking at the latest figures, we find that under P-Noy in October 2011, the unemployment rate was much lower at 6.4 percent of the labor force compared to the 7.1 percent unemployment rate recorded in October 2010 or three months after GMA’s term ended. This cut was achieved despite the increased in labor force participation rate (LFPR) from 64.2 percent of the working age group in October 2010 to 66.3 percent in the same month in 2011. An increase in the LFPR is usually indicative of the ease with which jobs are found that  encourages more people to join the labor force.

In her essay, GMA said that it is in poverty that we find the material roots of the problem of corruption—because the political system based on patronage and ultimately, corruption to support patronage—is made possible only by the large gap between the rich and the poor, adding that unless we enlarge the pie, this will persist. Unfortunately, according to her, the present administration has chosen to turn the problem upside down, anchoring their entire development strategy on one simplistic slogan: “Kung walang corrupt, walang mahirap.” Believing that poverty has persisted under P-Noy, the proposition according to GMA also means therefore the continuation of corruption under this Administration. Well, not so fast. The next poverty estimate still has to be done this year.

About corruption, here is what P-Noy’s Social Contract with the Filipino people says: (1) Corruption robs our children of their protection, nutrition and education; (2) Corruption destroys our families and communities; (3) Corruption steals from our farmers and workers; (4) Corruption deters businessmen from investing in our economy; (5) This has eroded our spirit as individuals, as communities, as a people; (6) We have lost trust in the democratic institutions we so courageously reestablished after the dictatorship; (7) Our proven capacity for collective outrage and righteous resistance has been weakened; (8) We have ceased to depend on the patriotism and civic engagement that used to animate many of our efforts; (9) We have become divided and alienated, focusing only on ourselves and on our individual pursuits; (10) Our moral faculties as a people have been paralyzed; (11) We have retreated into a dark world of self-absorption and cynicism; and (12) Our collective despair has reached its lowest point.

In short, P-Noy’s message to GMA is this: It’s corruption, teacher, especially under your administration, that is holding us from moving forward to realize our full potential.

Who is right? That we will know only by 2016.