#TheExplainer Newsletter Substack No. 1
And so it begins again, on Substack this time.
This week’s The Long View
In the bag, ho ho ho! is my column this week.
THE LONG VIEW
In the bag, ho ho ho!
By: Manuel L. Quezon III - @inquirerdotnet
Philippine Daily Inquirer / 05:07 AM December 21, 2022
The President kicked off Simbang Gabi season with an invitation to the public to hear Mass at the Palace, where one and all could enjoy puto bumbong afterward as a treat. He followed up boosting season’s feelings by signing an administrative order granting a one-time P25 kilo rice gift to civil servants, the military, and workers in government-owned corporations. The only sign that the executive office is still slightly slipshod and not in tip-top shape is a reference to Presidential Decree No. 1597 being a “series of 1987” when it was issued in 1978 (plus no decrees were issued after Feb. 25, 1986!). But while the new executive secretary still has to put his house in order, the House of Representatives, for its part, has shown it can follow orders.
The year-ender news, of course, is that the House, in a supreme act of self-organization, passed the Maharlika scheme, a measure reinstating the Reserve Officers’ Training Corps, in college under a new name, while both chambers achieved passing the 2023 national budget in record time. Abraham Lincoln, who spent an enormous amount of time on patronage, once exclaimed, in exasperation, “Too many piglets, too few teats!” But the Duterte administration showed that if you possess the only fiscal teat in town, every piglet will obediently make a beeline for you. Such was the case with ayuda for the public and for the ruling coalition (in the form of “Build, build, build,” the rhetorical ribbon tied around the biggest public works smorgasbord in living memory) and which he made permanent in the face of the effects of the Mandanas ruling by “devolving” so many things to local government units (LGUs), they now have to line up for Palace handouts because the devolutions have eaten up any expected bonanza from the ruling.
Note that this switcheroo pays a double political dividend: It keeps LGUs dependent on the Palace while giving congressmen, in particular, leverage by way of public works, keeping them relevant in local politics. The national budget, in turn, provides the President with the funds to use to fill the “shortfalls” in LGU expenses that it caused in the first place (through budgetary devolution, saddling LGUs with expenses the national government will no longer fund), with the added bonus of intelligence funds that can be freely used with hardly any scrutiny. There is, too, a larder in the form of appropriations for ayuda and other emergency needs to be determined and disbursed by the Palace.
Marcus Alonzo Hanna, a businessman-turned-senator famously said: “There are two things that are important in politics. The first is money and I can’t remember what the second one is.” The legislators merged party lines once the President made Maharlika’s passage a matter not just of priority, but of face. The blogger Heneral Lunacy, a retired investment banker, pointedly remarked that the Maharlika Investment Fund (MIF) “brings to mind failed financial adventures of the last 40 years.” He pointed out that “[o]nce fully formed the MIF could represent an institution ‘too big to fail,’ a systemic risk to our financial (and our political) foundation.” This was actually a point raised by Juan Ponce Enrile, who cautioned that the fund may be in good hands under the incumbent President, but if mismanaged in the future, it would leave him “historically damaged.”
Heneral Lunacy did a public service by breaking down, first of all, the capital contributions for the Maharlika scheme. Public opinion vetoed sourcing funds from the Social Security System and the Government Service Insurance System (for now). Land Bank of the Philippines will chip in P50 billion (25 percent of its capital) and Development Bank of the Philippines (DBP), P25 billion (36 percent of its capital) when (notes Heneral Lunacy) the Aquino administration had to shore up the finances of both institutions by “injecting … P53 billion into these two GFIs”; this requirement now allocates 28 percent of their combined capital or 1.5 times that previous injection, meant to enable the two institutions to serve farmers and small and medium-sized enterprises, to a fund “with no track record, no disclosed management, and an unconstrained playing field.” And there’s more: Heneral Lunacy pegs the required contribution by the BSP of 50-100 percent of its dividends at P30-75 billion per year for at least five years; while the Philippine Amusement and Gaming Corp. being made to chip in 10 percent of its gaming revenues means about P7.6 billion if one uses its pre-pandemic 2019 gaming revenues of P76 billion as an estimate. In other words, P100 billion a year is projected to be earmarked as mandated contributions.
Heneral Lunacy points out there is a five-year lock-up on contributions. So if the DBP and Landbank, for example, want out, “the next time the GFIs will see their money is by the end of this administration.” Nor do these big contributors have a big say in what happens: They are minority investors, only two votes out of 15 on the board. Then again, the blogger points out the so-called controls are just that: so-called because features of other failed funds. Enrile’s advice may have saved the current and future presidents from jail by substituting the secretary of finance as chair, but it will be an executive-dominated entity. And, it is “no small money.” A billion has been allocated for startup expenses alone; management fees for a P250-billion fund would amount to P5 billion; the fund, exempted from income tax, will be required to allocate what it would have paid in taxes for “social amelioration,” which Heneral Lunacy reads as “vote gathering and pork barrel” projects.
And if it risks being too big to fail, it risks being too big to resist: “The MIF will have the country’s largest war chest in history to do as it pleases, including hostile takeovers with favored partners or driving political business groups out of existence. The combination of regulatory powers, a willing Congress, judicial complacency, 31 million in political capital, an unsuspecting public, willing cronies, and a financial behemoth growing in perpetuity with allegiance principally to political sponsors, is a scary thought.”
Call it the nightmare before Christmas.
Related readings:
My column makes mention of this blog entry: The MIF 2.0: An Economic and Political Behemoth In The Making which bears reading in full (if you can, read the previous two entries, too, as this one is the third in a series on the topic).
Other readings:
I asked someone the question who in turn pointed to Noel de Dio's comment on the passing of Jose Ma. Sison: "Like him or not, he made a mark. Question is whether his passing signifies any coming change." A page has turned in our broader history and that of our radical movements.
This blog entry by a young foreign service officer makes for thought-provoking reading: Jose Maria Sison, 83:
In his prime, he styled himself as the Mao Zedong of the Philippines. Had his rebellion succeeded, his portrait would be hanging in Manila’s Rizal Park now and the place would look like mini Tiananmen. His call for a two-phased “protracted people’s war” inspired a generation of Filipinos that, for a time, seriously considered the allure of Maoism and Stalinism. Many of them are now leaders in Philippine arts, culture, business, politics, and bureaucracy.
Sison was a prolific communist theorist, but not very original. His conceptual grammar was the theory of the “unfinished revolution” — in vogue in the 1950s — which asserts that the work of the 1896 Philippine Revolution had yet to be consummated, having been interrupted with the First Republic’s defeat in the Philippine-American War in 1902. This framing also informed the views of right-leaning nationalists like Claro M. Recto and Jose P. Laurel. As one commentator pointed out, these two men served in the Japanese-backed Second Republic as foreign minister and president, respectively, and were subsequently indicted for doing so. Therefore, their political rehabilitation partly required the promotion of an alternative to the prevailing liberal historiography that affirmed the correctness of winning Philippine independence through arguments in the U.S. Congress rather than shooting in the trenches — a narrative that validated Filipino loyalty to the Allied cause during the war.
The theory of the “unfinished revolution” also resonated with the left, which had been marginalized by the political establishment of the postwar Third Republic despite doing the heavy lifting in the anti-Japanese resistance. Academics like Renato Constantino linked the socialist cause of the 1950s-60s to the mass movement led by the Katipunan against Spain in the 1890s, conveniently ignoring the fact that the Katipunan was a mostly middle class organization. Recto and Laurel further incubated this alternative narrative in their new school, the Lyceum, where Sison taught impressionable students including the young Rodrigo Duterte. It was during his time as professor there that Sison fused this theory of “unfinished revolution” with Mao’s reframing of Marxism, which substituted the proletariat with the peasantry as the main communist vanguard.
By that time, the new Soviet leadership under Nikita Krushchev had rejected Stalinism and announced a policy of “peaceful coexistence” with capitalist states. This inspired the Philippine communist leadership — then still licking its wounds following its colossal defeat from President Ramón Magsaysay’s soft power offensive — to start abandoning guerrilla warfare in favor of parliamentary struggle. Mao, eager to maintain the legitimacy of the personality cult that underpinned his Cultural Revolution, rejected Kruschev’s “destalinization.”
Taking his cue from Beijing, Sison wrote a stinging rebuke of the Philippine communist party’s renewed pragmatism. He called on all cadres to “rectify the errors” of the party leadership. Backed by a critical mass of young communists that were mostly his own students, Sison wrestled control of the party from the Lava dynasty that had founded it. He also placed the Philippine movement firmly on the side of Beijing during the Sino-Soviet split.
In his fantasy, Sison’s successful coup against Lava was Filipino communism’s “First Rectification Movement,” mimicking the official Chinese nomenclature that describes Mao’s campaign for party leadership in the 1940s. When he and his cadres started the New People’s Army (NPA) in Isabela, he labeled it the “Yan-an phase” of his “revolution,” again referencing Maoist jargon — Mao led the Long March from his Yan-an lair. Demonstrating his Maoist inclination to subordinate historical accuracy to ideological exigencies, Sison falsely claimed to have “reestablished” the Filipino Communist party in Pangasinan with a “congress of restoration” comprising of 75 delegates on Mao’s 75th birthday. In reality, this so-called “congress” was convened by merely around a dozen followers under a grove of trees and only a week after Mao’s birthday.
Sison became a formidable figure in the 1970s because Philippine political and social conditions were ripe for revolutionary sentiments at that time. But when a more sensible leader like Corazon Aquino emerged with the backing of important institutions like the Catholic Church, he became irrelevant. Filipinos turned to the democratic alternative offered by Aquino — one that, in her words, “rejected the mindless cruelty of the right and the purging holocaust of the left” — and built a new constitutional order that upholds the democratic vision of the First Republic.
The 1986 EDSA Revolution marginalized Sison and his followers, leading to some soul searching within the communist leadership that ultimately resulted in an irreconcilable split. Deviating even from the new track pursued by the new leadership in Beijing under Deng Xiaoping, Sison insisted on “reaffirming” the violent Maoist ways. The other half of the party “rejected” armed struggle, opting instead to achieve reform through the ways of democracy. In the 1990s, as the Philippines began emerging as a new Asian tiger economy, President Fidel V. Ramos legalized communism and offered peace to the insurgent leadership. At the same time, Ramos covertly prosecuted a large-scale intelligence operation that exploited the communist movement’s internal schism and eventually decimated the communist leadership. Today, Sison’s rebellion has been reduced to a nuisance.
In the end, Sison’s analysis of the Philippines as a semi-colonial country ruled by a grand conspiracy that seeks to maintain American supremacy did not pass the test of time. Manila expelled U.S. bases from Philippine shores in the 1990s and now deals with the U.S. as a more equal ally. Inequality and social injustice persist, but no credible observer would say that this is by official design, or that the government is not doing something about it.
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