The social and economic divide Wikipedia

The social and economic divide Featured

In a forum on federalism I attended last week, some 50 experts on autonomy, governance and federalism came together for the first time to exchange experiences and perspectives. The idea was to present an opportunity for Filipinos and other nationalities, especially the policy makers dealing with various societal and political problems, to learn from each other. What crossed my mind in this forum and another conference I attended subsequently on market economy was that a change in the political and economic structure of our government is urgently needed. The clock is ticking fast and unless progress and growth become inclusive in a bottom-up process, there might be a violent collapse of the Philippine economy.

According to economic experts, in the Philippines, only 40 families out of 120-million people control 97 percent of the country’s wealth. While the country’s gross domestic product grew in the past two years, adding about $16.6 billion or some P816 billion to the Philippine GDP in 2014 alone, 51 percent of this growth went to only the 40 richest families in the country. One of the speakers in the social market economy conference said that based on latest statistics, these 40 wealthy families have a net worth of trillions of pesos, equal to, or even bigger, than the Philippines’ national budget. It was even worse in the previous years. The combined income of the 40 richest, according to former Economic Development chief, Cielito Habito, accounted for 76.5 percent of the country’s growth in 2012.

In contrast, data from the Philippine Statistics Authority shows that more than 25-million people or 26 percent of the Philippine population live on one dollar or P48 pesos per day. The poorest—the fisherfolk and the farmers—generally survive on just one meal a day. In the whole of Asia, the Philippines has earned the notoriety of being the only country which failed to cut in half the poverty level in the last 25 years. The Philippines holds the infamy of having the worst rich-poor divide in Asia.

To address the extreme disparity in wealth, there have been moves in Congress to amend the Philippine tax laws to make those earning so much more pay higher taxes, Until now, however, no law has been passed. As it has always been, the rich easily get richer and the poor, poorer. Under the present tax system, a person earning more than P500,000 annually pays income tax of 32 percent. Those earning in millions and billions pay the same percentage of income tax. The result is, the middle class gets smaller and the poor sector gets bigger.

History tells us that it is exceedingly difficult, if not impossible, to make the politicians who belong to the oligarchic or wealthy classes to pass laws that will reform the economy to one that is inclusive. We have been witnesses to their outright refusal, too, to pass a law that will prohibit political dynasties despite the mandate of the Philippine Constitution that an Anti-Political Dynasty Law must be passed by Congress.

The only solution that appears viable now is a change in our present overly-centralized system of government to one that will allow real decentralization of powers and a bottom-up economic progress. The Germans have successfully put in place what they call a social market economy where no one is left behind because each citizen is given the chance to obtain education, get a job, enjoy health services—all that are needed to live a life of dignity.

The President of the Republic has oft repeated that he wants the Philippines to be a federal republic. His vision is for the poorest Filipino to rise from poverty. Although the process of federalization will take long, as it is never easy to make an upstream swim, it is worth working for. Under our present system—passed on to us by our Spanish and American colonizers—the center controls all the power and the wealth. If we discard the unitary centralized system for a wider participation in governance and nation building and to allow a large portion of taxes collected in regions to be retained by them, hope will come. The clock is ticking fast. Our enemies are the growing poverty and disparity in resources which breed insurgency, terrorism, discontent, and crimes. Those tasked in Congress to propose revisions to the Constitution must be ever mindful of the general good, not those of the elites who have, for far too long, taken advantage of our dysfunctional system.

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