EDSA, Neoliberalism, and Globalization

Mar 23

(Delivered at Coalesce Conference, sponsored by Ateneo Lex, Ateneo de Manila, March 18, 2017.)

Most of you had not yet seen the light of day when the EDSA Uprising took place in February 1986. To my generation, this event was a memorable step in the Philippines struggle for democracy. The three decades that followed were marked by the reign of liberal democracy as the country’s political regime. Those thirty years coincided with the rise and dominance of neoliberalism as an economic ideology and globalization as an economic trend.

It is now clear that those three decades constituted a lost opportunity for the Filipino people, that the promise of the EDSA Republic was subverted by the neoliberal and pro-globalization policies that were adopted by the administrations that reigned between 1986 and 2016. It is also evident from the tumultuous events of the last year that what we now call Dutertismo is to a great extent an angry and resentful reaction to the EDSA Republic’s failure to live up to the promise that accompanied its birth.

My focus in this talk will be on how neoliberalism and globalization combined with the continuing gross inequality in the distribution of income and wealth to subvert the promise of EDSA. I would like begin, however, by briefly discussing the failure of EDSA to deliver on the political front.

Unhealthy Birthmarks

There were three unhealthy birthmarks that marred the EDSA Republic: the role of the military, the intervention of the United States, and the leadership of the elite.

The prominent role of the military rebels in triggering the insurrection gave them a sense of having a special role in the post-Marcos dispensation. Only after seven failed coups was civilian constitutional role stabilized. But, in retrospect, military discontent was not as damaging to the EDSA Republic as US patronage and elite hegemony.

The US was not only a player; it was a decisive player. Even before the Aquino assassination in 1983, Washington sought to nudge Marcos and the elite opposition to arrive at some compromise. These pressures escalated in 1985, resulting in Marcos’ calling for the snap elections that became the vehicle for the mobilization of the middle class and some of the popular sectors against the regime and paving the way for the military mutiny. At that point powerful forces in Washington overcame President Ronald Reagan’s reluctance to cut Marcos loose and moved to directly remove the dictator from the scene. At an off-the-record briefing at the State Department on April 23, 1986, to which I was mistakenly invited, Undersecretary of State Michael Armacost openly boasted of how the US moved during Marcos’ last months in power: “Our objective was to capture… to encourage the democratic forces of the center, then consolidate control by the middle and also win away the soft support of the NPA [New People’s Army]. So far, so good.”

The US role in serving as midwife led it to consider the EDSA regime as a protectorate. While the opposition of the Senate majority to the new bases treaty was disconcerting to Washington, it got what it wanted from the government in virtually all other areas. It got Cory Aquino to make repayment of the foreign debt–especially that owed to US banks–the top priority of the new government. And it eventually brought its overwhelming military presence back with the Enhanced Defense Cooperation Agreement, where Cory’s son, President Benigno Aquino III, agreed to allow Washington to set up US bases in nominally Philippine bases.

The third flaw of the EDSA Revolution is that it was an uprising whose direction was set by the anti-Marcos factions of the elite. Their aim was to restore competition among the elites while containing pressures for structural change. The 1987 Constitution enshrined the rhetoric of democracy, human rights, due process, and social justice, but these aspirations were frozen in amber owing to the dearth of implementing laws and actions that would translate them into reality. Via periodic electoral exercises the factional monopoly of power under Marcos became a class monopoly, open to intra-elite competition for the most important national, regional, and local offices but virtually closed to the lower orders as money politics became the order of the day.

The Neoliberal Debacle

Despite its political shortcomings, the EDSA regime would probably have retained a significant amount of support had it delivered on the economic front. Indeed, it would be an understatement to say that the EDSA system failed to translate its promise of delivering less poverty, more equality, and more social justice into reality.

Perhaps the key tragedy of the EDSA Republic was that it came into being right at the time that neoliberalism was on the ascendant as an ideology and globalization became the flavor of the month for capitalism. Even before the February 1986 uprising, the Philippines had become one of four guinea pigs of the new structural adjustment program unveiled by the World Bank, which aimed to bring down tariffs, deregulate the economy, and privatize government enterprises.

As noted above, under the administration of Corazon Aquino, pressure from the International Monetary Fund and US banks made repayment of the foreign debt the top national economic priority, and Washington and the IMF ensured that succeeding administrations would follow suit by having Congress adopt the automatic appropriations law that made repayment of the state’s debt the first cut in the national budget. Over the next three decades, debt servicing would take up to 20 to 45% of the annual government budget, crippling the government’s capacity to invest and stimulate economic growth and provide essential social services.

With the 1992-98 administration of Fidel Ramos, neoliberalism reached its apogee: tariffs were radically cut to zero-to-five percent, deregulation and privatization were sped up, and the Philippines joined the World Trade Organization — to “benefit”, it was said, from the tide of corporate-driven globalization. Under Ramos and later administrations, the contours of the EDSA political economy were firmed up: pro-market policies, relentless privatization, export-oriented development, export of labor, low wages to attract foreign investors, and conservative monetary and fiscal management. As the Philippines’ neighbors retained high levels of economic protection, neoliberal policies contributed to the Philippines’ having the second lowest yearly average growth rate in Southeast Asia from 1990 to 2010. Even the second-tier ASEAN economies of Vietnam, Cambodia, Laos, and Burma outstripped it.

The sad reality is that liberalization was a program of unilateral disarmament that resulted in the destabilization of almost all sectors of manufacturing, resulting in deindustrialization. Let me cite the sad plight of our once world-class shoe industry. In the 1960’s and 1970’s, our shoe industry based in Marikina was very dynamic, with some 2000 factories. Owing to liberalization and smuggling, there are only some 100 factories left today. And with the demise of the industry, the leather and tanning industry that serviced the shoe industry whose center was Meycawayan, Bulacan, also virtually disappeared.

Let us briefly touch on our agriculture. Before we joined the World Trade Organization in 1995, we were a net agricultural exporting country. Free trade turned us into a net agricultural importing country, with cheap imports eroding all sectors of the industry from vegetables to grain to poultry and meat. The crisis of our farmers stems not only from the continuing unequal distribution of land but also from the deprotectionization of our agricultural economy.

Deindustrialization and agro-destabilization were one face of globalization. The other was our conversion into a remittance dependent economy as we were pushed into an international division of labor in which we became a prime exporter of cheap labor to the global economy. In short, globalization involved the disintegration of our domestic economy and our integration into the global economy as a provider of low-wage unskilled and semi-skilled labor. To a great extent, education has become a process of preparing workers for export abroad. As the former chairman of the House of Representatives Committee on Overseas Workers, who witnessed first hand the tremendous insecurity of our migrant workers, I can tell you that this was a bad bargain.

Let me continue. Although the economy registered 6-7% growth rates from 2012 to 2015, there was no “trickle down” to counter the legacy of stagnation bequeathed by neoliberal policies. At nearly 25% of the population, the percentage living in poverty in 2015 was practically the same as in 2003. The gini coefficient, the best summary measure of inequality, jumped from 0.438 in 1991 to 0.506 in 2009, among the highest in the world. For many Filipinos, the statistics were superfluous. Extreme poverty was so wretchedly visible in the big urban poor clusters within and surrounding Metro Manila and in depressed rural communities throughout the country.

Corruption and Class

The neoliberal paradigm was not, however, the only cause of the EDSA regime’s failure to address the deepening social crisis. Corruption was a problem, as it was in the Philippines’ neighbors. The administrations of Joseph Estrada and Gloria Macapagal Arroyo became synonymous with unbridled corruption.

But even more consequential than corruption was class. Just as they had forced Marcos to halt his land reform program in the 1970s, the landed class successfully resisted the implementation of Republic Act 6657, Cory Aquino’s already watered-down land reform program. A civil society push to reenergize the program, which was passed in 2009, bogged down under the Benigno Aquino III administration owing to lack of political will and presidential indifference. By the end of the Comprehensive Agrarian Reform Program with Extension Law (CARPER) in 2014, about 700,000 hectares of the best private land in the country remained in the hands of landlords, violence against land reform beneficiaries was common, and rural poverty remained stubbornly high.

Unaccompanied by structural reforms, the World Bank-supported Conditional Cash Transfer (CCT) anti-poverty program of the Aquino administration, though it eventually covered some 4.4 million families, or nearly one-fifth of the population, could barely make a dent on poverty and inequality.

Over the Cliff

Class callousness, double standards, and inept governance finally drove the EDSA Republic to the edge of the cliff during the Aquino III period. Popular support had steadied the EDSA Republic when it was challenged by military coups in the late eighties. By 2016, however, three decades of disillusionment had made it a tired, discredited system waiting to be pushed over the cliff, and it was, by the electoral insurgency that brought Duterte to power and provided legitimacy to his brazen moves toward fascism. Dutertismo is EDSA’s vengeful offspring even as the administration has not broken with the EDSA Republic’s failed economic policies. That is, however, another story.

So let me just end by saying that neoliberalism and globalization have been discredited globally, especially after the 2008 global financial crisis. Our experience is not unique. And the response has been, as in the Philippines, a turn towards fascist or authoritarian populist solutions. The challenge to us at this point is to break with this failed economic model and junk the old mantras about the so-called benefits of globalization. That won’t be easy, but we have no choice.

Thank you.

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