[ANALYSIS] How Duterte’s whims and caprices hurt the economy

JC Punongbayan

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[ANALYSIS] How Duterte’s whims and caprices hurt the economy
A common theme seems to thread all these policies: not only do they tend to hurt economic efficiency, they’re also often anti-poor


There’s a term I hear with increasing frequency these days: policy-based evidence-making.

The proper term, of course, is evidence-based policy-making. But in the past few years a number of government agencies have found themselves implementing policies without the benefit of empirical data and careful study.

Many of these policies originate from Duterte’s ramblings and musings, which are now as good as official policy. Minions, eager to curry favor, grant Duterte’s wishes uncritically and unquestioningly. They also often scramble for justifications after implementation rather than before.

This blind and reckless approach to policy-making is disturbing on two counts.

First, it only adds to the cloud of uncertainty now hanging over the economy and erodes business confidence, weak as it is.

Second, and more importantly, Duterte’s whims and caprices can destroy millions of Filipinos’ jobs and livelihoods in one fell swoop.

In this article let’s focus on two recent examples: the Philippine Charity Sweepstakes Office (PCSO) ban and the Metro Manila Development Authority’s (MMDA) traffic policies.

PCSO ban

Almost two weeks ago, President Rodrigo Duterte appeared on TV late at night to announce a surprise ban on all games operated, licensed, and franchised by the PCSO.

Crying foul over allegations of “massive corruption,” Duterte ordered the police and military to immediately arrest all those engaged in such games. Later, Palace Spokesperson Salvador Panelo even said that “all players and participants of these gaming operations are involved” in corruption.

But 4 days later, on July 30, Duterte lifted the ban on lotto operations as if nothing happened.

Although fleeting, this PCSO ban exemplifies the pernicious effects of Duterte’s unpredictability.

For starters, thousands rely on these games as a source of income. But one morning they all woke up to find their jobs casually killed off by Duterte – an “economic Tokhang” if you will.

A lot of people also depend on the various health and medical assistance programs of PCSO.

Last year, PCSO generated nearly P64 billion in net revenues, 30% of which went to its Charity Fund which benefited more than half a million patients nationwide in the form of confinements, medicines, and lab/diagnostic procedures.

Meanwhile, 40% of PCSO’s Charity Fund is also set to partially finance the Universal Health Care (UHC) Act signed by Duterte last February.

In the grand scheme of things, PCSO’s Charity Fund doesn’t amount to much. But as things stand UHC’s implementation is already imperiled in the coming years, and the law needs all the money it could get.

The Department of Finance (DOF) projects that the law will require at least P257 billion next year, but we’re currently short of P62 billion. Funding gaps will only widen in the coming years (see Figure 1).

Figure 1

Notwithstanding corruption allegations mentioned by Duterte, it hardly seems fair for him to take it out on the thousands of Filipinos who rely on PCSO as a source of livelihood and medical help.

But Palace Spokesperson Panelo dismissively said, “I’m sure ‘yung mga naapektuhan, hindi naman ganoon kahirap.” (I’m sure those affected are not that poor.)

The DOF has had to play along and said the day after Duterte announced it that they would evaluate the ban’s financial impacts.

This is policy-based evidence-making at its finest, reminiscent of the time Duterte closed down Boracay even if he had not yet seen the National Economic and Development Authority’s estimates of the closure’s economic consequences.

MMDA’s traffic policies

Ill-conceived policies are also behind the massive traffic gridlock we’ve been suffering in Metro Manila these past few days.

To abate traffic congestion, the Metro Manila Council approved in April a new regulation that revoked the permits of all 47 provincial bus terminals along EDSA.

The MMDA, which is under the direct supervision of the Office of the President, wants to prevent provincial buses from loading and unloading passengers along EDSA.

Needless to say, this policy against provincial buses is plain stupid.

Not only does it unduly discriminate against commuters coming from, and going to, the provinces, it also attacks the wrong problem because cars and motorcycles, not provincial buses (or buses for that matter), predominantly take up space along EDSA (see Figure 2).

Figure 2

A Quezon City court, seeing sense, already issued a preliminary injunction halting this inane policy because of its “far-reaching effects.”

Yet this did not prevent the MMDA from conducting a “voluntary dry run” on August 7, claiming they have yet to receive the court order.

Specifically, MMDA restricted buses to EDSA’s two outermost (yellow) lanes. But this blocked off entry and exit points for all other vehicles entering the highway. The result? Apocalyptic jams, angry commuters, and several wasted hours.

Some might say that problematizing EDSA is yet another manifestation of “imperial Manila.”

But we can’t deny that Metro Manila is our economy’s beating heart, easily accounting for more than a third of our country’s income. Choking traffic – and policies that worsen such choking – will only bring our economy closer to the brink of a national stroke.

Mayors and MMDA officials need not even do the mental heavy lifting: they need only listen to the myriad transport experts who say that our society is too car-centric. Shifting instead to a people-centric framework will work wonders in reclaiming lost space and lost time on our roads.

Unfortunately, this key insight seems to be lost even among the primary implementors of Duterte’s massive infrastructure project called Build, Build, Build.

They’re still fixated on creating more and wider roads. By contrast, transport experts have been saying all along that wider roads do not necessarily make vehicles go faster. (READ: Carmaggedon redux: Will building more roads solve our traffic problems?)

The MMDA can conjure up any number of fancy, showy policies to fix worsening congestion in Metro Manila. But until it gets its objectives right – and pays enough attention to data and research – our traffic woes will only worsen.

Traversing Cubao to Makati in 5 minutes will remain the pipe dream that it is.

Blind pilot

The PCSO ban and MMDA’s traffic policies are just two of Duterte’s recent arbitrary and evidence-bereft policies – besides the Boracay shutdownmartial law in Mindanao, and the war on drugs.

A common theme, though, seems to thread all these policies: not only do they tend to hurt economic efficiency a lot, they’re also often anti-poor.

Crafting high-stakes policies without the benefit of data and research is like allowing a pilot to fly a passenger plane while ignoring the instrument panel before him. The pilot is effectively blind, and you can’t be faulted for wishing to disembark as soon as possible.

Duterte has less than 3 years in office, but there seems to be no reprieve. Brace for a directionless, turbulent flight ahead. – Rappler.com


The author is a PhD candidate at the UP School of Economics. His views are independent of the views of his affiliations. Follow JC on Twitter (@jcpunongbayan) and Usapang Econ (usapangecon.com).

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JC Punongbayan

Jan Carlo “JC” Punongbayan, PhD is an assistant professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for Rappler.com. He is also co-founder of UsapangEcon.com and co-host of Usapang Econ Podcast.