Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017

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Town Hall Meeting at Harvard

           The investment road show led by Ambassador Jose Cuisia Jr. which I joined last April 22 to 27 culminated in a very memorable town hall meeting with members of the Harvard community with special interest in the Philippines.  There were some 100 Americans, Fil-Americans and Filipinos in the Greater Boston Area who responded to an invitation to a traditional town hall meeting.  It was held at the Harvard Student Organization Center right in the middle of the Harvard campus.  For me it was a sentimental journey since it marked the fiftieth anniversary of my graduation from the Harvard Graduate School of Arts and Sciences.  It was with some emotion that I faced Filipino students in the different schools of Harvard University who were there to listen to a briefing on the state of the Philippine economy.  I saw in those young and bright looking faces the future leaders who will help sustain the economic success that my fellow road show speakers and I had been heralding in three key cities (Los Angeles, Chicago, and Boston) this year after another three-city journey last year (Washington, D.C., New York and San Francisco).

          I was ready for a more academically challenging encounter since many in the audiences were either professors or graduate students at Harvard and the surrounding universities, as compared with the predominantly business backgrounds of the audiences we addressed in the three cities.  True enough, the questions were more penetrating about how sustainable will be the present high growth of 6 to 8% in GDP once a new leader takes over in 2016.  What if the next President is not as committed to fighting corruption as President Benigno Aquino III?  The same question was asked in all the encounters we had but at Harvard, the audience expected a more intellectually satisfying answer.  Fortunately, I remembered that the authors of the book on which I am basing my analysis of sustainable inclusive growth are well known in Cambridge, Massachusetts.  The first author is Dr. Daron Acemoglu, Killian Professor of Economics at MIT and the second is James A. Robinson, the David Florence Professor of Government at Harvard University.  They authored the best seller entitled "Why Nations Fail."

          As I have discussed in previous columns, President Aquino himself acknowledges that the strong recovery of the Philippines under his watch can be attributed to a series of reforms that spanned at least the last 27 years since the Administration of his mother, former President Cory Aquino.  He has said that he is only standing on the shoulders of other leaders who came before him.  Gradually through more than a quarter of a century, the Philippines has been undergoing reforms towards more inclusive political and economic institutions.  Under President Cory, democratic political institutions were restored and strengthened.  Under President Ramos, there were significant market-oriented transformations consisting in the privatization, liberalization and deregulation of the economy.  Under both Joseph Estrada and Gloria Macapagal Arroyo, the Philippines took quantum leaps in countryside and agricultural infrastructures.  Finally, under the present Administration, governance reforms together with even more substantial improvements in infrastructures through the Public Private Partnership (PPP) route have earned for the country investment grade ratings from credit rating agencies, such as Fitch, Standard and Poor and the Japanese Rating Agency.

          The key phrase here is gradual change. As Acemoglu and Robinson wrote in their book, "Gradual change prevented ventures into uncharged territories.  A violent overthrow of the system means that something entirely new has to be built in place of what has been removed.  This was the case with the French Revolution, when the first experiment with democracy led to the Terror and then back to a monarchy twice before finally leading to the French Third Republic in 1870. It was the case in the Russian Revolution, where the desires of many for a more equal system than that of the Russian empire led to a one-party dictatorship that was much more violent, bloody, and vicious than what it had replaced.  Gradual reform was difficult in these societies precisely because they lacked pluralism and were highly extractive.  It was the pluralism emerging from the Glorious Revolution, and the rule of law that it introduced, that made gradual change feasible, and desirable in Britain."

          Because the EDSA revolution was won by a "people power" associated with the middle class and not the proletariat, there was no danger of the Philippines jumping from the frying fan into the fire after Marcos fled.  There was no Marxist-style violent revolution.  What ensued was a painfully slow process of reforms, two steps forward, one step backward, until the present dispensation.  Adverting to the British case, Acemoglu and Robinson cited Edmund Burke who wrote in 1790:  "It is with infinite caution that any man should venture upon pulling down an edifice, which has answered in any tolerable degree for ages the common purposes of society, or on building it up again without having models and patterns of approved utility before his eyes."  The authors disagreed with Burke on the big picture in applying this analysis to the French revolution because they opined that the French Revolution had replaced a rotten edifice and opened the way for inclusive institutions not only in France, but throughout much of Western Europe.  But they conceded that Burke's caution was not entirely off the mark:  "The gradual process of British political reform, which had started in 1688 and would pick up pace three decades after Burke's death, would be more effective because its gradual nature made it more powerful, harder to resist, and ultimately more durable."  I told the audience at the Harvard Student Organization Center that the gradual and painfully long process of reforms that the Philippines has undergone since 1986 has made Philippine political and economic institutions more powerful, harder to resist and ultimately more durable.  Q.E.D. we can sustain the inclusive economic growth that has begun under the present Administration beyond 2016, regardless of who is elected the next President.  For comments, my email address is