Philippine poverty: ‘It’s the state, stupid!’

It’s the economy, stupid,” former United States President Bill Clinton’s 1992 presidential campaign adviser, James Carville, once famously argued. Over the next generation, countless pundits and even serious-minded scholars drew on this tactical-situational intervention to argue that voters and the broader human civilization are fundamentally a “homo economicus”: namely, a rational, utility-maximizing species primarily concerned with economic well-being.

All questions of ”war and peace,” accordingly, have been largely reduced to the science of economics and economic-focused public policy. But one need not read G.W.F. Hegel to understand that history is replete with examples of fateful elections and earthshaking revolutions driven by ”cultural” and ”ideological” considerations—even if meant risking livelihoods and ruining economies.

Some of the most consequential revolutions of the 20th century, most notably in Shah’s Iran, took place after (not in the absence of) decades of rapid economic growth. In fact, the first nation to fall under the Arab uprisings was among the most economically successful in the region: Tunisia. In North Korea, I had a firsthand experience of how a whole regime chose ideology (Juche) over economic viability. Or think of how our voters fell for former President Rodrigo Duterte’s “kill, kill, kill” policy agenda in 2016 after a decade of rapid economic growth—the second fastest in Southeast Asia—from the late Arroyo to Aquino administrations. As leading political thinkers, such as Francis Fukuyama, have noted, the ”struggle for recognition” has often proven a far more potent source of political change and electoral shocks than rational, economic decision-making.

In the Philippines, dear reader, we have our own version of ”homo economicus” simplistic thinking: “It’s corruption, stupid!” Practically all major and not-so-major thought leaders in this country keep on talking about corruption as the ultima ratio of everything that is wrong with our country. Of course, we need to fight corruption, which is evil. The problem with this well-intentioned discourse, however, is that not only is it analytically deficient, but also politically self-destructive. Empirically speaking, all rigorous indicators and academic studies show that the Philippines is ”not” exceptionally corrupt.

A cursory look at the corruption perception index shows that our state is just as (if not more) corrupt as far more developed nations, from Thailand to Turkey and Russia. More robust indices, such as the state capture index, which measures oligarchic distortion of laws and rules in favor of particularistic interests, show that the Filipino elite is significantly less corrupt than their counterparts in Ankara and Bangkok.

Though well-intentioned, this “It’s corruption, stupid” narrative also distracts us from more fundamental explanations for the lack of inclusive development in the country. On one hand, it absolves our technocrats and policymakers of appropriate scrutiny. Hence, the dearth of any detailed self-reflection on the impact of our ”standard” fiscal and monetary policies (on the lack of) infrastructure development and manufacturing growth, which have been the single most effective source of inclusive growth for all successful postcolonial nations.

None of our successful neighbors have been as fiscally prudent and monetarily conservative as the Philippine technocratic elite: from South Korea to China, from Taiwan to Malaysia, and even Indonesia. We have seen countless regimes, both democratic and authoritarian, engaging in aggressive industrial policy and expansionary monetary and fiscal policies aimed at boosting growth, reducing poverty, funding large-scale infrastructure projects, and building ”national champions” in critical industries. Political economists, such as Joe Studwell (“How Asia Works”) and Yusuke Takagi (“Central Banking as State Building”), provide incontrovertible evidence of misguided economic policies in the Philippines, which prevented the emergence of a developmental state. By shifting the discourse to solely about corruption, both technocrats and like-minded civil society leaders ”crowd out” any substantive discussion of our overall political economy.

Empirically speaking, the good news is that our state is not as hopelessly corrupt and hapless as our do-gooder folks imply. A cursory look at the state capacity index, for instance, shows that our state institutions are average in terms of basic capacity (and rank higher than Russia and Thailand and similar to Brazil) by global standards, just as the state capture index shows it to be averagely corrupt. The implication is clear: there is hope, and we need to start investing in our state capacity—better welfare provision, tax and data collection, meritocratic appointments, an empowered civil service, and a professionalized security sector—if we want to fight both corruption and underdevelopment in one of the most promising nations on Earth.