Inclusive economic and political institutions part 2

Published September 20, 2022, 5:31 AM by Dr. Bernardo M. Villegas

Part 2

Our bad experiences with authoritarian leaders should not lead to the extreme of believing that the best government is the least government. As we saw in the last article, the famous German sociologist, Max Weber,provided the most famous and widely accepted definition of the state, identifying it with the “monopoly of legitimate violence.” Without such a monopoly and the necessary degree of centralization of power itentails, the state can hardly play its role of law and order. That is why, even from the point of view of Christian social doctrine, the State—together with the family—are the only two institutions in society that proceed from the very nature of man. They are natural institutions. All other institutions are “artificial” and are not inherent to the nature of human beings

Because the authority of the state is indispensable in the achievement of the goals of any nation, it is imperative that there be good governance. It is my intention here to examine the role of good governance in our common desire to attain First World status in the decade spanning 2040 to 2050. Here, I will depend a great deal on a pamphlet recently written by Dr. Jesus Estanislao on what he refers to as Dream Philippines 2046. Jess, who was the primary founder (I was a co-founder) of the Center for Research and Communication (CRC) that eventually evolved into what is now the University of Asia and the Pacific, is also the founder of the Institute of Corporate Directors (ICD) and the Institute for Solidarity Asia (ISA). He has occupied some top positions in Government, notably that of the Secretary of Finance under the Administration of the late Corazon C. Aquino. True to the principle of subsidiarity which dictates that progress and development must be initiated from below, the ICD fosters good corporate governance in the private sector.

In the website of ICD, we read that good corporate governance is critical to a country’s global competitiveness and has been shown to have a direct correlation with corporate profitability and growth. Government regulations require it. Companies of all sizes need it. It is at the level of the corporation that the varying and sometimes conflicting interests of the various stakeholders are balanced and protected.ICD is a non-stock, not-for-profit organization working in close partnership with other business, government and civil society organizations. As an independent and autonomous institute, it is open to working with others in the pursuit of systemic corporate governance reforms by networking with various institutes all over East Asia to enrich Director Education and share best practices in corporate governance. ICD is a major player in Philippine corporate governance reform initiatives working closely with the Organization for Economic Co-operation and Development (OECD), the Global Corporate Governance Forum, and the International Corporate Governance Network on improving actual boardroom practices, moving away from mere principles to actual practices. More importantly, as regards contributing to good governance in the public sector, it works closely with key regulators with direct immediate interest in corporate governance such as the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission, and the Insurance Commission. In fact, recent good news from the Bureau of Customs reflects some of the accomplishments of the work of ICD and the related NGO Institute of Solidarity Asia (ISA) with public agencies like the Bureau of Customs. After years of engaging the management and staff of the BoC in good governance reforms, ICD and ISA can boast of very concrete results of improved collections. In August 2022, the Bureau of Customs exceeded its collection target by a whopping 34.1 %, thanks to digitalization and streamlining of processes which have significantly cut corruption for which this government agency has been notorious in the past.

In his capacity as Chairman Emeritus of ICD, Jess wrote a pamphlet entitled “A Perspective on Dream PH: Philippines 2040s, Let Us Get There.” In this publication, he offers clearcut solutions in addressing the challenge of lifting what economists call the “production possibility curve” in various sectors of the Philippine economy. He rejects the usual defeatist solution given by some people in the private sector, “Let the Government do it.” He takes a very balanced view. He is by no means a “minimalist”, the less Government the better. He makes it clear that we cannot give up on government, that the government authority is indispensable in attaining the common good of society. He cites the special role of the Government in setting clear strategic priorities for the country and in mobilizing resources to provide critically needed public facilities and other much needed infrastructure. In his own words, he emphasizes, “The list of essential government functions is a long one, and there can be no substitute for government.”

He is quick to point out, though, that the Government is not a monolith nor does it function in a vacuum. There is need, therefore, to come down from a too “macro” or aggregate view of government, recognizing that other than the President, Congress and the Supreme Court, there are many other different government agencies and instrumentalities, especially at the local government level. The Government does not work in a vacuum. It has to interact with numerous non-governmental players in various sectors of society and the economy and even ordinary citizens who represent the grass roots. Attaining Dream 2046 (the centennial of Philippine democracy) would require all stakeholders in society to work with the many instrumentalities of government and the public sector.

Having worked with national economic planning agencies, such as the Program Implementation Agency (PIA) and the Presidential Economic Staff (PES) during the time of President Diosdado Macapagal, Jess saw the limits of macroeconomic analysis and planning. Although it is necessary to make forecasts of GDP, population, labor force, prices, and other aggregate economic data, there is even greater need to delve into the microeconomic world of sectors, regions, industries and enterprises. That is why after leaving the Government, Jess established the now famous Center for Research and Communication (CRC) which started out as a think tank doing abundant research on industrial and business economics. Realizing that the findings of research, no matter how thorough and scientific, would be useless if they are not communicated to the policy and decision makers, Jess added the word “Communication” in labeling the think tank he started with a group of young economists. Thus, the name Center for Research and Communication. Since 1967, CRC has been a source of well analyzed data on the economics of sectors, regions and industries that have fed both the government and private business sector with valuable microeconomic information necessary for decision making at the regional, sectoral, industrial or firm levels.

In his Dream PH pamphlet, Jess suggests a list of critical steps that have to be taken to improve the productivity of Philippine institutions at all levels of the value chain.

1. The transformation process of the institution must be for real. It must be substantive. The transformative outcomes must show that the institution has become stronger; and those outcomes are noticed and felt (as well as appreciated) by the constituencies that the institution serves.

2. There must be a way of cascading the strategic mindset and best practices of transformation down to the individual person within each institution. It is only at this level that a culture of good governance can be installed and nurtured. It is then the responsibility of each individual person in the organization to radiate the culture of good governance to his family and social network. In this way, the positive impact of the transformation can touch the lives and work of many more people, multiplying the impact of the cultural transformation to possibly thousands or even hundreds of thousands of individuals.

3. It is important to keep the process open. Experiences from other parts of the world can enrich the process of transformation. Benchmarking against external (regional and global) standards can open minds, broaden horizons , and provide a sustained push towards ever-higher levels of quality in doing things and in introducing innovations for greater efficiency. The culture of “Never Tama Na” is especially important to overcome a weakness in Filipino work ethic.

4. One must always keep in mind that transformation is systemic. It spreads out by affecting all facets and levels of institutional operations and decision-making; it forges links and strengthens linkages; it banks on multi-sector consortia (such as the Philippine Business for Education or the Makati Business Club, a business organization of which Jess was one of the founders) to positively influence external value chains and proactively promote the further development of a whole area, even an entire region, and possibly a broader sector of an economy or even the entire society. The institution would need to reach out to schools, faith groups, civil society or nongovernmental organizations, media and key institutional partners from both the private and public sectors. By reaching out to many sectors of society, it is possible to broaden and deepen the socio-economic impact of a few, strategically selected “social responsibility” initiatives it undertakes in close partnership with key sectors of the community.

Jess has no illusion that this transformation process will be sustained unless we have what Max Weber called the“monopoly of legitimate violence. He makes it a conditio sine qua non that Government (and in particular the top leadership of the Administration) adopts it and operationalizes it, as mandated by our current Constitution. Given the target date of 2046, this burden and responsibility will lie on President Ferdinand Marcos Jr. and at least three more future Presidents. Their work is cut out for them: they must arrange for all government instrumentalities to work in close coordination and cooperation with all key sectors of the economy and society. Together, they must formulate the strategic vision for the country. Every six years, such a vision would need to be refreshed, considering developments that may have affected each of our economic resource bases (human, natural, and strategic location given the dynamics of the broader global environment).

Jess is realistic enough, however, to state that if we are not so luckyas to elect as the nation’s chief executive the best possible candidate (as happens in many democratic countries), we can still attain our Dream PH 2046 vision. We just have to ensure that the best and brightest will lead most of our government economic agencies as we have already experienced in at least the last thirty years (with special mention of the present Administration). Despite our having witnessed different qualities of political leadership since at least the EDSA revolution, we have been fortunate enough to have enjoyed consistent high-quality leadership among our economic agencies. Needless to say, these competent and honest heads of the leading government economic agencies need, as Jess postulates, a “deeply committed leadership in other critical components of government and in other sectors of the economy and society.” It is the responsibility of every concerned citizen to contribute to a culture of excellence and good governance in as many sectors of society as possible to ensure that Philippine society will survive any future wrong choice of a President. This choice of the best and brightest to aid the Chief Executive must be cascaded to the Local Government levels. It is notable that the ICD and ISA that Jess founded and whose leadership was in the hands up to recently of now DTI Secretary Alfredo Pascual have devoted a great deal of time and effort to improve governance in a good number of cities and provinces that can now be considered as role models for other LGU units to emulate.

For comments, my email address is bernardo.villegas@uap.asia

https://mb.com.ph/2022/09/20/inclusive-economic-and-political-institutions-2/