«

»

May 28

The Long View: Honest and dishonest graft

The Long View
Honest and dishonest graft

By Manuel L. Quezon III
Philippine Daily Inquirer
First Posted 00:35:00 05/28/2009


The reason bishops and farmers get hosed down at the doorstep of the House of Representatives, an institution that’s supposed to represent and not repel them, is a simple one: land remains the fundamental basis for wealth, prestige and power in our country. Landowners are in a position to ensure their interests are protected by lawmakers, many of whom are landowners themselves. But it might be inaccurate to simply describe the House of Representatives as a “landlord-dominated” body, since there are many lawmakers who enter office without being landowners and who may never achieve the extensive landholdings hacenderos possess.

John Sidel has argued that for politicians, ownership of land wasn’t a sine qua non for obtaining political office, which is often how the origins of our political class has been understood. Rather, it would be better to understand ownership of land as the fruits of political office; that from quite early on, our system as it evolved, allowed enterprising individuals to turn their professional credentials, particularly as lawyers, into the means to gain access to political office; and that once in office, control over not only law-making but the executive management and control of the many licensing and permit-granting powers of government, is what enabled officials to buy land, and make the jump from obscurity to high social status.

This is what he calls the “mechanisms for private monopolization of the resources and prerogatives of the state” - in other words, a kind of dynastic regime of fixers. You do not have to be a hacendero to sympathize with and uphold the interests of hacenderos, because it’s just possible that many lawmakers don’t equate land wealth with owning plantations, but instead are more interested in urban property. It might just be that in contrast to hacenderos who inherited land, the political class is more likely to speculate in land, buying cheap property and selling that property when development has overtaken previously worthless areas, turning the land into prime commercial real estate.

The American Tammany Hall politician George Washington Plunkitt, at the turn of the 20th century, called this kind of speculation “honest graft,” in contrast to “dishonest graft,” or simply stealing from the public treasury. Honest graft, he said, boiled down to this: “I seen my opportunities and I took ’em.” How? He gave concrete examples.

Say, he said, “my party’s in power in the city, and it’s goin’ to undertake a lot of public improvements. Well, I’m tipped off, say, that they’re going to lay out a new park at a certain place.” Armed with such insider information, “I see my opportunity and I take it. I go to that place and I buy up all the land I can in the neighborhood. Then the board of this or that makes its plan public, and there is a rush to get my land, which nobody cared particular for before.”

The result? The rewards of speculation! “Ain’t it perfectly honest to charge a good price and make a profit on my investment and foresight? Of course, it is. Well, that’s honest graft.”

Another scheme involves the right of way for public projects: “Or supposin’ it’s a new bridge they’re goin’ to build. I get tipped off and I buy as much property as I can that has to be taken for approaches. I sell at my own price later on and drop some more money in the bank.”

Plunkitt rhetorically asked, “Wouldn’t you? It’s just like lookin’ ahead in Wall Street or in the coffee or cotton market. It’s honest graft, and I’m lookin’ for it every day in the year. I will tell you frankly that I’ve got a good lot of it, too.”

Or take another instance: “I’ll tell you of one case. They were goin’ to fix up a big park, no matter where. I got on to it, and went lookin’ about for land in that neighborhood.

“I could get nothin’ at a bargain but a big piece of swamp, but I took it fast enough and held on to it. What turned out was just what I counted on. They couldn’t make the park complete without Plunkitt’s swamp, and they had to pay a good price for it. Anything dishonest in that?”

“Somehow,” he bragged, “I always guessed about right, and shouldn’t I enjoy the profit of my foresight? It was rather amusin’ when the condemnation commissioners came along and found piece after piece of the land in the name of George Plunkitt of the Fifteenth Assembly District, New York City. They wondered how I knew just what to buy. The answer is, I seen my opportunity and I took it.”

Here, in a nutshell, is how many politicians in the past made their money, and as far as it goes, there was nothing specifically illegal with this method. But even at the turn of the last century, Plunkitt tried to distinguish between what he did, from plain and simple graft. His, he claimed, was the “honest” kind, in that it required street smarts and avoiding outright theft from the treasury.

But the world has moved on since the turn of the 20th century, and just as insider trading in the stock market is now illegal in the 21st, what could be winked at in the past can no longer be tolerated. The bar for permissible official behavior has been raised higher and higher. What has become obnoxious to the public is the idea that elected leaders, by virtue of their insider knowledge, can engineer public works so that their lands are affected, either in that they get to pay themselves, by means of right of way, or be first in line to profit from the development that follows from public works improvements.

Read Plunkitt’s bragging about “honest graft,” if you want to understand the real issue at the heart of the accusations against former Senate President Manuel Villar. The issue is not whether real estate is, by itself, incompatible with his being a public servant, but rather whether he has put public works at the service of his pocketbook, directly, by means of using his influence to maximize specific profits from specific properties.

5 comments

Skip to comment form

  1. Jhay

    Well, you have to hand it to Villar for his amazing foresight and bold entrepreneurial spirit.

  2. UP n grad

    In the US, there now are existing laws against the transactions described by Plunkitt. I even think that there are penalties against the civil-service worker (be this a clerk or a director) who leaks the insider information to a speculator.

    In Pinas, are there existing laws against similar transactions?

  3. mlq3

    the ethical and corrupt practices act, etc. upn, but they are so sweeping as to be incompatible with many aspects of our cutlure, and we don’t have a whistleblower law.

  4. Armand Camhol

    Dear Manuel Quezon III,

    Greetings from Ifugao Province!

    I’m Armand Camhol, a project development officer at the Provincial government of Ifugao and staff-writer of the Happitan, our monthly provincial newsletter. I have read this article of yours a few months back and it is impressive! I would want the people of my province to be aware of these possibilities, of “honest graft” more than the usual treasury-raiding. I wish for your permission to reprint this article of yours in our newsletter, with full credits, of course.

    Thank you very much, sir! I hope to hear from you soon.

    Sincerely yours,
    Armand Camhol
    Project Development Officer
    Provincial Capitol
    Lagawe, Ifugao

  5. mlq3

    Armand, many thanks, and yes, please do.

Leave a Reply