A VIEW FROM THE CENTER: Federalism impacts inclusive growth

A VIEW FROM THE CENTER: Federalism impacts inclusive growth Featured


How is it that the six-year reign of the Liberal Party-dominated former PNoy administration could dazzle the economic growth figures but retain the same poverty levels and a relatively inactive labor force resulting from inadequate jobs, low-paying jobs, “endo” jobs, etc.? Given our youthful demographics and the very large numbers of new working-age youth numbering about a million joining the labor force every year, certainly, root causes have to be traced and solutions have to be found urgently.

Some economist even makes the claim that in the early years of the Aquino administration, much of the economic growth went mostly to the top 45 families in the country. All throughout the previous government, there were calls for “inclusive growth” and yet by the end of its term, there had not been much progress in trickling down the benefits of the expanding economic pie.

To call a spade a spade, many thought that the similar poor performance of trickling growth not reaching the grassroots during the time of the GMA administration was caused by massive corruption. Thus, the slogan of the winner in the 2010 elections was, “No corruption, no poverty,” suggesting that it was not unitarianism (the opposite of federalism) that was the problem but rather simply the corruption at all levels of government.

So, how to explain that even with a clean President, the unitarian system of the country could still not deliver trickled growth to the satisfaction of the majority? Had they achieved this, no doubt the elections of 2016 would have yielded different results.

I think it is largely because the unitarian model of governance is over-reliant on the use of enterprises (not households) as the basic unit of the different economic sectors, and thus as the basis for computing the GNP. In this way, if the President wanted to increase GNP, the “logical” way in the unitarian’s GNP enterprise-centered framework (used exclusively to this day in measuring economic performance) is to empower the enterprises (here you see the beginnings of the “superiority principle: Unitarians believe in strengthening the strong in the hope their actions will trickle benefits to the bottom) so that their income goes up, because when it does, then logically the GNP will go up.

The Unitarian approach to governance then looks at undesirable impacts of over-empowered economic elite and organizes totally unrelated programs under the Social Welfare department to directly shoot cash into poverty households under the CCT or 4Ps program.

What is the cure for the unitarian enterprise-centric GNP? Shift to its exact opposite: federalist community-centric, area-based planning as the basis of the GNP accounting, whereby we substitute household value added and savings for the sectoral enterprise value-added and savings. In doing this, we can get the GNP as accounted from all 20 million Filipino households (starting at the barangay or village level) and the results will directly reveal slow-performing areas that can be addressed in the next budget cycle. This will naturally achieve more inclusive growth. There will be no need for a CCT or a 4Ps program.

Given that the opposite of the superiority-unitarian model is the subsidiarity- federalism model, it is highly likely that genuine inclusive growth will spontaneously emerge under federalism whereby the regions, being closer to the grassroots by a factor of 18 (as we have 18 regions) cannot only better “see” the grassroots but planning and budgeting are necessarily “integrated” to achieve socio-economic goals in the area.

You see, in the unitarian budget, planning, the basis for spending taxes, is highly fractured rather than integrated. I use the word “fractured” as in “broken” given that if you take any locality in a unitarian country, you will realize that about 70 percent of its territory is being planned by totally different units (DENR, NIA, DPWH, etc.) with very little coordination with the 30 percent held under the jurisdiction of local government units (LGUs), which are the alienable and disposable land categories. In a federalist set-up, there is no such thing as fractured budgeting and planning as plans are integrated at the regional level only and for all line departments and LGUs at the same time. Therefore, there is congruence in the area-centered approach under federalism and growth does not have to tickle down (pinatulo) but rather can be “nurtured up” (pinatubo) under federalism. Which do you think will yield the good fruits of inclusive growth?

For 50 years now, every succeeding government administration has uttered the policy of distributing growth to the periphery and over that same 50 years, more and more economic concentration in the greater metropolis of Metro Manila (extending as far as Dasmarinas City in Cavite and Angeles City in the North) under unitarianism has occurred and in proportionally fewer and fewer super elite families.

Lastly, there is a direct correlation too between how economically competitive a country is and federalism: Switzerland, Singapore, the United States, Germany, and The Netherlands are the top 5 most competitive countries in 2015 and all of them are federal or federal-like except for Singapore, which is just a “city-stat,e” not a full, normal country in the global average sense. And one of the recognized factors for competitiveness is “innovation” or new ideas, which are obviously better nurtured in a country where planning is not fractured and solutions are more homegrown than that falling from the sky (as in unitarianism). Many economists will readily agree that more competitive countries are those with better distribution of income and inclusive growth.

So, the evidence shows that it is the very unitarianism that is the problem with attaining “inclusive growth.” It seems that it is an impossibility. It is not congruent. It does not compute.

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source: http://www.manilatimes.net/federalism-impacts-inclusive-growth/289733/

Read 2410 times Last modified on Thursday, 06 October 2016 11:53
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