The Long View: Past’s lessons (1)

THE LONG VIEW

Past’s lessons (1)

 / 05:06 AM March 24, 2021

On Twitter there’s a fellow who tweets from time to time, about going to the Nepa-Q Mart to buy necessities, and what the area at any given time reveals about the pandemic and our authorities’ response to it (in a nutshell: to barricade and intimidate the public).

I’ve often wondered if anyone who goes to that market realizes that it’s named after what some have described as the oldest NGO in the country — the National Economic Protectionism Association — and how there’s a tug of war for public opinion in terms of loosening our constitutional restrictions on foreign ownership. As far as that goes, the public, if one goes by past surveys, is fairly open to foreign business ownership but absolutely draws the line at foreign ownership of land (in true Filipino fashion, there is an unexpressed, thus unwritten, self-benefiting loophole: if you are a foreigner and want to own land, marry a Filipino).

One of the founders of Nepa in 1934 was a gentleman named Salvador Araneta who became a delegate to the constitutional convention convened in that year. He proposed, and almost succeeded in getting approved, a provision to nationalize, or restrict to Filipino citizens, the retail trade. The idea was, as he put it, to “Filipinize” the retail trade, then heavily in the hands of foreigners. As it turned out, delegates ended up convinced that this was a policy best left to the future legislature of the Commonwealth because to do otherwise might lead to American rejection of the proposed new constitution; and indeed, in 1939, it was formally proposed during the Commonwealth anniversary celebrations that year. As it would turn out, it wasn’t until 1954 that the Retail Trade Nationalization Act became law. What followed were two decades of extortion aimed at Chinese residents in the Philippines, squeezed two ways: immigration quotas meant hardly any could become Filipino even if they wanted to; and because they couldn’t be Filipino, they were extorted money to stay in the country and for any business they continued to operate through dummies. It wasn’t until Marcos, with decree-making powers, ordered the mass naturalization of what then became Chinese Filipinos (many of the older generation of which remain grateful to Marcos to this day) that this anomalous situation was rectified.

In the pre-independence period, Teodoro M. Locsin Sr. succinctly described the colonial economy as one designed to keep the Filipinos in their (subordinate) place as “hewers of wood and drawers of water,” thus producing cheap raw materials while importing finished goods. This state of affairs persisted so that after the war, as the Korean War led to a ramping-up of American demand for war-related goods, it was former enemies like Japan, with the know-how from its prewar industrial economy, that rebuilt and supplied demand, while countries like the Philippines were incapable of doing so; not least, as Lisandro Claudio has discussed in his chapter on Salvador Araneta in his interesting book, “Liberalism and the Postcolony: Thinking the State in 20th-Century Philippines,” people like Araneta, who wanted the country to actively compete for markets, which meant allowing the peso to seek its own level in the market (instead of being artificially, and nostalgically, permanently pegged at the prewar PHP-USD rate of 2:1), were unable to budge people like Miguel Cuaderno Sr., the central bank’s chief who pursued a conservative policy meant to keep down inflation.

What goes around, comes around, and in many ways the passionate advocacy of people like Araneta — to put the country and its people ahead of abstract ideas that conform to some sort of conventional wisdom among conservative bankers, regardless of the human cost — ends up revisited. However our current escalation in the pandemic ends up, it’s become clear that one of the major catastrophes we’ve had to endure is the rigid thinking of the economic team of the administration, which doesn’t believe in pumping cash into the economy on a large scale. It’s one reason we have a lockdown without it being called a lockdown — so government won’t have to spend on relief. In contrast, other countries have adopted the thinking Araneta subscribed to — of the British economist John Maynard Keynes — and their pumping money into their economies has helped sustain ours.

(To be continued)

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Manuel L. Quezon III.

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