Tuesday, September 23, 2008

Replacing self-seekers with visionaries

The high and mighty leaders of the political-economic cabal that has lorded over our nation for the past twenty-two years since Edsa I are in a quandary. As they hitched the Philippines onto the West’s economic system, preaching the infallibility of “free market” and private capitalism, they have dishonestly promised global prosperity and progress from the “efficiency” of free market competition and the compassion of so-called “corporate social responsibility.”

The 80’s Thatcherite and Reaganomics did just that, spurring deregulation and privatization everywhere. And with the fall of socialist Soviet Russia, it seemed the triumph of the capitalist “free trade” model was further set in stone, leading its adherents to propagate this doctrine even more.

Given these seemingly powerful arguments, many Filipinos bought in as the endorsers counted the likes of Cory Aquino, Solita Monsod, Fidel V. Ramos, Gloria Arroyo, Paderanga, etc.

So much was the enthusiasm back then that US historian Francis Fukuyama proposed that the Western capitalist model had ushered in the “End of History” and that no better system could ever be devised again.

A decade later, the Oracle of Omaha, Warren Buffet, the richest billionaire in the world revealed in a CNN interview: “The rich people are doing so well in this country. I mean we never had it so good… It’s class warfare; my class is winning… Right now corporate profits as a percent of GDP in this country are right at the high. Corporate taxes as a percent of total taxes are very close to the bottom.”

The rich people everywhere else in the world, particularly the Philippines, were doing likewise, especially the bankers who, for instance, reveled in the repeal of the Anti-Usury Law, profiting from the currency crisis that shot interest rates over 40 percent in the wake of the Ninoy assassination, as with the local agents of transnational corporations taking over profitable public utilities paid for by public money.

Today, the plight of the US subprime mortgage victims exemplifies this situation. A CNN discussion with a panel of ordinary US home buyers, who have suddenly found themselves kicked out of the houses they were paying for, and community leaders, faced with half of the houses in their community suddenly left empty, with criminality overtaking their locales, made it poignantly clear that the deregulated interest rates for housing loans allowed mortgage rates to rise continuously even as middle and lower class wages did not keep up, causing homeowners to default and lose their homes.

While bankers lobbied with politicians and bought legislative favors with campaign contributions, the little people were helpless. Now, with the crisis in full force, US politicians are again bailing out the bankers and not the people. In a just world, the government would directly bailout home buyers and bankrupt the bankers.

Indeed, the $800 billion bailout has produced a “dead cat bounce,” i.e. a temporary recovery that will not last. They’ve been doing such bailouts, such as the year 2000 dot.com collapse, eventhough the inevitable will happen. That’s what transpired in the Great Depression and even then President Franklin D. Roosevelt zeroed in on the real culprits. It is timely to quote him on his Inaugural Address:

“...Our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered, because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.

“Primarily, this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and have abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

“True, they have tried. But their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.”

In the US , as well as, the Philippines , the “unscrupulous money changers” through their “false leadership” are trying to persuade the people that they are fixing things alright. One mainstream local paper quoted FDR’s saying, “Nothing to fear but fear itself.” Local headlines blared that local banks have only $382 million in Lehman's.” But do you think they don’t have investments in Merrill Lynch, AIG, and the like? Is Cuisia credible when he says Philam is okay because it has a different capital base when everybody in the industry knows that all of Philam’s investments are made from Hong Kong and the local chief is only a figurehead?

In the US , mainstream media is making the argument that the bailout of the bankers is necessary and that the alternative is worse, as typified by the line: “What would have happened if AIG was not bailed out?” But for anyone who understands justice and real economics, the answer, of course, is that government should go direct to the people and bail them out.

Government as a principle should finance people’s homes directly without the bankers’ intermediation. In the Philippines , government should issue credit directly to farms, by skipping the bankers who buy T-bills to skirt their duty to help agriculture grow, as well as, fund factories directly -- else, bankers will just lend to mall operators or car dealers for zero interest purchases.

By the way, since GSIS had recently appointed a foreign fund manager, can we believe that it didn’t invest in any of other major failing funds even as it announced that it has not invested in Lehman’s?

There was a wise rule in the SSS during Marcos’ time banning the investment of its funds in stock markets and the like -- a rule that began to whittle under FVR’s time with Rene Valencia, and which would have accelerated under NaƱagas but thankfully shelved after intense opposition from the SSS union.

Bankers, corporations, and politicians: These constitute the generation of self-seekers whom Franklin D. Roosevelt indicted for the Great Depression, who are much like the self-seekers of today. We need to seek out visionaries and place them at the helm…today!