It Is About Getting Things Done

“ Abilidad: A Tagalog/Spanish noun; the ability to accomplish things often under difficult conditions. “

In what would normally be a media frenzy in the final stages of what is the existential election of our time, the political headline of the week was – I kid you not – the “dramatic’ announcement by four presidentiables that, well, they are still in the race. Not of course that anybody was asking nor cared but, yeah, fellas, thanks for letting us know you are still around. The money spent on the press conference might have been better used feeding a few hundred indigents.

The four candidates were Isko Moreno, Manny Pacquiao, Ping Lacson and Norberto Gonzales (huh?) which speaks as much of the heft of the candidates as it does of their message. When you have to include Gonzales in the proceedings to make up the numbers you know you are in political trouble. Manny Pacquiao eventually was a no-show so give him some credit for political instinct. 

Sensing that the group’s message was about as flat as their collective numbers at the polls, Isko proceeded to suggest that VP Leni who just happens to be polling twice stronger than him; should opt out of the race to make things more competitive with BBM. The  other presidentiables quickly denied this was ever part of the agenda. The move raised Leni’s popularity a notch. Isko did retract but by then was too late. It was an act of frustration from a promising political player who has not scored and is in danger of fouling out.

Meanwhile back in the campaign trail the polls seem unchanged with BBM looking comfortable. Leni recently experienced a surge but with three weeks to go can’t seem to breach the 25% threshold which incidentally is where Mar and Grace got stuck in 2016. Duterte won that race with 40% of the final tally. 

The post mortem will show that whatever the outcome, this will have been one of the most ho-hum of presidential elections even as the race will define this nation for ages. The absence of presidential debates contributed to this as has the early and large BBM poll lead. There were controversies enough like the reported failure by BBM to file tax returns or his unpaid estate tax bill of some PHP 200 billion or the President’s allegations of cocaine use; but nothing seemed to perturb the public. The COMELEC just dismissed the last challenge to his candidacy. Short of confirmed cannibalism in the family they look to be in.

The Leni camp is looking for a game changer that could make up 20 points in the vote count but has seemingly run out of ideas. She is banking on the momentum that took her from 16% to 24% in the polls since the beginning of the year but even that linear progression would fall short. Our economic crisis and COVID could in another time been fertile ground to arouse public outrage. However Leni is unable to tie BBM to the failures of the current Administration because Duterte is not on the ballot. In this strange way BBM actually represents the change that voters want. 

Instead Leni chose to link BBM to the legacy of his Dad’s Government, a 35 year gap that is historically hard to bridge particularly for our young. She might have focused rather on what she will do for the present generation.

The final sprint to May 9 will be largely driven by campaign spend with BBM flush with cash. Some weeks ago there was a noticeable uptick in the peso which could be dollars imported for the final electoral push. Leni’s only hope is the Marcos’ underspend following the Ilocanos’ propensity for frugality but that would be a BBM mistake. Considering this is for all the marbles I would nail this sucker down and not leave anything to chance.

There is also the matter of turn-out, of converting the polls into votes. For BBM there is the danger of complacency because of his lead. For Leni it is getting her base to vote but this means money and organization.

Democracy can be like a woman one goes to bed with in a drunken stupor and wake up the next morning asking, “Was that the person I slept with?”. We believe in democracy so we are frustrated when it does not deliver the best product as advertised. Some ascribe the failures of democracy to poverty, to voter education, to money but even the US democratic process delivered Trump when Americans are not necessarily poor, corrupt or uneducated. 

The flaw of the democratic thesis is it assumes all voters are rational which evidence has often disproven. My take is voters look to their prospective leaders not necessarily for values nor intelligence nor vision nor policy but  for what I term “abilidad”, the skill to make things happen be it by force of personality, political acumen, ruthlessness, money or all of the above.

There is a political saying that goes: “Voters forget what you say, they only remember how they felt when you said it.” If you believe the polls, despite all her pronouncements Leni cannot seemingly convince enough voters she has the “abilidad” to deliver on what she pledges, to bring home the bacon. Her choice of campaign color, I believe, did not help.. Pink is pretty, delicate and in-between. She might have chosen a primary color that denotes strength and decisiveness.

Admittedly BBM has arguably never delivered anything either but his family did and he is the embodiment of that. His father ruled us for over 20 uninterrupted years. After over 30 years the Marcos’ have made a comeback unprecedented in world history, going from possibly the most reviled name in politics to a competitive VP race in 2016 and now a possible landslide in 2022. You may not like it but that is “abilidad”.

So that is our political tragedy, that voters will lean into candidates who they perceive can effect change not distinguishing whether the change is for the good or for the bad.

The Hidden Specter Of Inflation

The BSP and the Philippine Statistics Authority must be smoking dope.

They just happily announced our inflation rate is contained at 4% as measured by the Consumer Price Index. The CPI is based on a theoretical basket of household goods and services of which Food (39%), Rent, utilities, etc. (23%) and Transport (8%) make up 70% of total with the rest distributed among Health (3%), Education (3%), Clothing (3%), Household maintenance (3%), Communications (3%) Others (15%). By comparison the US CPI is expected to reach 7- 8%, Bloomberg reports world food inflation at 13% and the UN’s FAO Food Price Index has hit an all time high. A major local food manufacturer told me its agricultural raw material costs have risen 30%. Is our CPI the only index spared from the ravages of inflation?     

Inflation is not a matter that alarms higher income households because the CPI basket represents only a fraction of their disposable income; but for the poor it is an existential threat, a regressive tax that could spell the difference between three, two or no meals a day.

Rising food prices is part of a 30% inflation in worldwide commodity prices as a whole as demand surged following COVID while supply was constrained by bottlenecks like delays in US seaports from labor negotiations, COVID lockdowns in key Chinese manufacturing cities and now the Ukrainian crisis whose impact on world food stocks in particular is vastly under reported.

Commodities are divided into four categories: Food, energy, industrial metals and precious metals with the first two being of most concern: 

  • Russia and Ukraine make up 30% of food and energy exports in the world.
  • Russia and Ukraine account for 24% of exports of wheat and corn.
  • Most of Ukrainian grain comes from its Eastern provinces which is the area most afflicted by the war. Ukrainian grain shipments are down 25%.
  • Ukraine is a significant exporter of vegetable oil and barley.
  • Russia and Belarus which is adjacent to the war zone make up to an estimated 32% of world exports of the three main fertilizer groups (nitrogen, phosphorous, and potash) which are essential to agriculture. Payment sanctions have affected Russian fertilizer exports.
  • Ukranian food production is not expected to normalize soon because farmers have missed this spring’s planting season.
  • As a result of the Ukranian crisis other traditional food exporters have imposed bans on foreign sales adding to the worldwide shortage.

Media attention has focused on the oil crisis arising from Ukraine forgetting the food implications are equally as serious. Some believe Putin invaded Ukraine to strategically control a vital source of food.

What are the implications for the Philippines of this looming food shortage?

The Philippines is reported to be the 10th country most affected by restricted Ukrainian food exports (Egypt is number one).

At the current rate of real inflation which I believe to be high single digit prices are eating into Filipinos’ savings and incomes faster than our ability to raise wages and build our economic base. This means millions of Filipinos are progressively falling behind even as they have still to recover from the ravages of COVID.

The Philippines will report positive growth in the coming quarters but these are largely from “the base effect” of of our disastrous numbers last year. I do not expect us to reach 2019 economic levels until 2023 even in the best of scenarios.

The inflation crisis is only part of other concerns. We are PHP12 trillion in debt at a time of rising interest rates, a slowing world economy, a deterioration in our external accounts from higher commodity prices, a potentially weaker peso, and a new Government in transition.

The BSP is holding down interest rates as it correctly believes higher prices are not due to excess liquidity but to supply constraints and inflation-induced imports. However with the U.S. ratcheting up interest rates at what could be an accelerated pace, the BSP will soon have to follow suit if it does not want the peso to dangerously depreciate from the interest rate differentials with the USD. Such a move will further dampen what is already a modest economic recovery.

Higher interest rates means higher budgetary deficits. Already debt service makes up some 25% of our PHP5 trillion 2022 Budget. On a PHP12 trillion debt, any one percent increase in interest rates means PHP120 billion in additional payments to creditors. The U.S. Fed has raised interest rates by 150 basis points in the last 4 months and is expected to add another 150-200 basis points in the next  12 -18 months. If the BSP was to track this, the additional interest bill is close to PHP400 billion. This will displace funds currently allocated to agriculture, infrastructure, education, health and social services.

The new Government’s main priority must be how to protect the average Filipino from the specter of inflation. On the oil side there are calls to defer the excise taxes. On the food side the only alternative is to expand the Cash Transfer program while awaiting for the economy to gain traction. An expanded safety net will mean leakages from corruption and pressure on the national budget but the alternative is a humanitarian crisis.

The new Government will need to review the 2022 budget allocations to make room for the higher social spend. The Budget is committed to debt service and automatic annual appropriations which leaves only some 15% for budgetary changes (subject to legislative approval). The new funds will have to come from savings – last year’s Bayanihan funds are not all spent -, infrastructure and bits and pieces elsewhere. The only sacred cow will be Defense especially for a Marcos Government which is well aware not to mess with the military’s money.

The private sector may have to chip in with higher taxes. The reduction in the corporate income tax implemented last year may need to be reviewed or deferred especially since there is little evidence the initiative generated new investment.

On the long term, with food (and water) to remain a permanent worldwide concern, we need to urgently address the matter of our Food Security. We pay lip service to it but have always succumbed given the arduous task of developing a serious Agro-Industrial Program.

We are in a food and inflationary crisis but we do not know it. We are under reporting the problem with a 4% CPI that is unhinged from reality. Neither the outgoing Administration nor any of the incoming seem mindful of the problem. As fas as our Government is concerned there is nothing amiss and that is what is so scary.

Is There Life After The Elections?

“Democracy does not come naturally. You often have to work at it.”

Poltiical campaigns fall into one or a combination of the following: There is the politics of ideology (left vs right), the politics of morality (good vs evil), of personality, of policies, of fear or hatred, of power (goons, guns and gold), and the politics of branding.

The choice of political drivers often depends on circumstances: For example in Latin America and its history of revolutionary Governments from Che Guevarra on the left to Pinochet of Chile on the right politicians often campaign on class warfare. Following the atrocities of Martial Law Cory successfully introduced the politics of morality. With Duterte we witnessed the politics of cult and personality after the bland leadership of his predecessors.

Leni is running on the politics of morality interspersed with that of fear. This has gained her some traction but seemingly not enough to win. Morality has lost its shine as an issue – voters believe all politicians are corrupt – while the fear she raises of yet another Marcos has not resonated as she had hoped. Duterte also was successful in diminishing her persona and depriving her of the resources to prove her competence as VP. It did not help that Leni limited  her strategic options: When the Partido Reporma recently endorsed her, it was an excellent opportunity to invite the party’s VP candidate,Tito Sotto, to become her running mate, vice Kiko Pangilinan. Kiko brings nothing to her table other than trust and friendship. Tito Sotto, on the other hand, is immensely popular and until Sara was the outright favorite to win the position. A Leni-Sotto ticket may still not have done it for either but It would have re-energized the base, expanded her demographics and could have been the third gear Leni’s campaign needed. The combination was quickly nixed by Leni’s people suggesting territoriality and control was more important than actually winning.

Isko’s campaign is a mixture of personality politics, social media messaging and local accomplishments none of which individually or collectively add up to a national campaign. As I suggested, he would have been better served with another two terms as Manila Mayor; but he was a man in a hurry.

Pacquiao’s campaign is a combination of personality and moral politics. His failure to score was compounded by a naïveté of what it takes to organize a presidential run. “Just show up and they will come” does not quite always work that way. 

The BBM campaign is a difficult one to classify: It has no ideology, no intellectual heft, no morality play, no overwhelming personality (in fact how little is known of his persona and that of Sara is quite amazing), no scarecrows of fear and no muscling. And yet there he out-running the competition by double digit margins. BBM is running on the politics of a revisionist Marcos brand coupled with organization, funding, a divided opposition, good fortune (with Sara) and the appropriate amount of radio silence. In voters’ mind Marcos provides stability which after years of a disjointed Duterte Government must be attractive. Remember Martial Law was a popular notion to many until it exposed its true intentions.

There is the myth that democracy always delivers the best product so it is frustrating when it does not. As Winston Churchill said: “Democracy is not perfect but it is the best we have.” Democracy is particularly imperfect when voters vote with their stomachs for there can be no true political freedom without economic freedom.

BBM is ahead in the polls. Despite the doomsayers, the Philippines will not end with a BBM presidency. If there is anything the family learnt it is that one does not kill the goose that lays the Golden Egg. They are also mindful the world is watching. Social media has made our leaders more transparent if not necessarily more accountable. Sure a Marcos Administration is unlikely to be compassionate because that is not who the family is, it will be a presidency that could well revert to the Marcos mean once it gains in confidence, it will be a Government set to perpetrate itself. But will it be a Government that will bring down the nation, probably not unless the cockiness sets in.

Where does that put the opposition?

Despite the odds Leni must keep fighting to the finish line because that is what good losers do, go down punching. How she loses – if she does -, how she learns from it and how she recovers will also define her legacy.

In the longer term there is work to be done. The biggest mistake of the Liberals starting with Cory is they never took advantage of their historical and emotional momentum to found a future. They were indolent or just entitled, they never chose to build a real party from the ground up with all that it takes, voter education, registering volunteers, community organizing, undertaking livelihood and health initiatives. It left that all for Government to do not recognizing that building a base of its own is what will carry the long term fortunes of the party. 

Philippine politics have historically stood on an inverted triangle where the leadership determines the party, not on a standard triangle where the base forms the leadership. The result is a cacophony of political parties and presidential elections which are determined by personalities, not values nor programs. If we are to finally break the back of Philippine politics, we need to start on the difficult but ultimately rewarding task of building a political culture and value system from bottom up.

Of all the candidates Leni has the gravitas to undertake such an initiative but she has to hit the ground running while her supporters are still energized. Let us call this new initiative Isang Pilipino.

Isang Pilipino will not be a political a party but a movement whose mission is, one, provide services absent in Government particularly to the marginalized; two, to develop a young cadre of leaders in local Government and get them elected; and three to keep the flame of hope alive. It should be built around the NGOs, the youth and well meaning people. It must be sustainable so it must be founded not on political slogans but on gut issues like livelihood, education, health and housing. The movement should be an alternative to Government. It will organize volunteer medical residents and young graduates who will reach out to rural communities and caring local officials. It will mean food kitchens and micro finance. It will work through decentralized cells rather than hierarchies. It should start small but dream big. It will require funding some institutional but a lot crowd sourced. It must be visible. Its first goal is to build centers of community excellence which can be rapidly replicated in other geographies.

Isang Pilipino will build itself into a brand of proud, card carrying members.  Every recipient of the movement’s services must know from whence it came. It will have one logo and one vision. It should be a safe haven for Filipinos in need.

Leni and Manny Pacquiao should jointly head such a movement. Together they will provide the credibility essential to the funding and the purpose.

Although not its original mandate, Isang Pilipino will naturally take political form because all governance is eventually political. INC and El Shaddai started as religious organizations but today win elections. The Church will officially sponsor the movement providing the spiritual cove may be needed to be sustainable. The first political test of Isang Piilipino will be the local elections in 2025, whether  it can translate its economic and social DNA into a political force.

The Philippines needs to break out of cycle of top down politics and revolving politicians. That needs a think outside the box, a recasting of our political paradigm, a movement grounded on economic and social services but with political intentions. 

The question is whether we have it in each of us to raise our politics from the Phoenix.