THE PHILIPPINES, THE WORLD BANK (WB) AND THE RACE TO THE BOTTOM, Part 1 of 4

"We shall be better and braver and less helpless if we think that we ought to inquire  than we should have been if we indulged in the idle fancy that there was no knowing and no use in seeking to know what we do not know..." - SOCRATES

"The chief business of America is business" - President Calvin Coolidge, 1925

"What else do bankers do -- walk in and turn off the lights in the country." - William Slee, 1978

**************************

NOTES TO NEW READERS/VISITORS:  

1. Colored and/or underlined words are HTML links. Click on them to see the linked posts/articles. PLEASE SHARE: Forwarding this and other posts to relatives and friends, especially those in the homeland, is greatly appreciated. To share, use all social media tools: email, blog, Google+, Tumblr, Twitter, Facebook, Instagram, WhatsApp, etc. THANKS!!

2. Click the following underlined title/link to checkout these Essential/Primary Readings About Us Filipino Natives:

Primary Blog Posts/Readings for my fellow, Native (Malay/Indio) Filipinos-in-the-Philippines

3. Instantly translate to any of 71 foreign languages. Go to the sidebar on the right to choose your language. Fellow native Filipinos translation in Cebuano and Tagalog.

4. The postings are oftentimes long and a few readers have claimed being "burnt out."  My apologies...The selected topics are not for entertainment but to stimulate deep, serious thoughts per my MISSION Statement and hopefully to rock our boat of ignorance, apathy, and complacency, and hopefully lead to active citizenship.

*************************

LET US NOT KEEP OUR HEADS IN THE SAND

REMINDER: March 3, 2022. The total number of postings to date = is 578. Use keywords in the sidebar: PAST POSTINGS, Click LABEL (sorted by number of related posts)
to access.

WHAT NATIVE FILIPINOS OUGHT TO KNOW

"The vast majority of our citizenry who have for so long borne the burden of government’s economic policies that favor only a few do not yet see that their plight is merely the result of the continuing betrayal of their interests by our nation’s leaders. In a sense, this is an indictment against the people’s movement because of its failure to link the struggles of the past with the struggles of today..."

GLOBALIZATION IS RECOLONIZATION

******************************************** 

https://books.google.com/books?id=E6iLBQAAQBAJ&dq=Ellen+Augustine+philippines+world+bank

I HIGHLY RECOMMEND PURCHASE

Hi All,

We Filipinos spend an enormous time and energy talking about politics, i.e. political criticism. At best and rarely on matters/issues of political independence. At worst, oftentimes and predominantly, on personalities of our politicians at the national or local level.

We do not seem to appreciate the fact that economics: national economic development aka political economy is also vastly important and at this point in our history, requires equal, if not more, attention from the native citizenry. 

For without economic independence, political independence becomes ineffective and meaningless. Just like an individual with nothing except debt who therefore effectively becomes a person with no voice and is ignored. So we as a people, in our homeland and the world, are not on the radar of our native rulers and of many nations/peoples of the world.

The below piece came from a recent book written by former Economic Hit Men (EHM) individuals who worked for years representing the largest American banks as loan officers to Third World countries like our homeland. These few individuals later realized that they were tools of their financial institutions (multinational banks) through their work in arranging foreign loans to poor countries, including our homeland; giving loans that made them poorer. Their consciences made them tell us the tricks of their trade.

With our homeland as a primary example and as the poster boy for the Third World, these EHMs provide us insight into who they were, their background, how they did their transactions, whom they dealt with, the milieu they had, etc. 

Their works can only be summed up as the modus operandi of creditors (multinational banks) and debtors (our homeland represented by our native technocrats and ruling regime) and how all of their business led only to our continuing, decades-old and present national predicaments; characterized by deepening and expanding mass poverty, with all its adverse socioeconomic and political consequences.

By making the country such as our homeland as the only debtor (rather than lending directly to the private businesses who needed capital), the creditor banks via the IMF and WB tandem were able/can enforce payments, dictate to our homeland all changes they wanted in our government policies which greatly profit them; and conversely led to our national detriment. Bottomline, the creditor banks know that governments rarely, if ever, default; thus assuring them of getting repaid.

In the long run, as we now see or not still see, changes that negatively and gravely impact our domestic institutions: education, national economy and patrimony, native entrepreneurs, national sovereignty, etc., and further facilitated the penetration in our society by economic and cultural globalization --even before the term globalization aka neoliberalism became common currency.

All these led to our national and perpetual perdition.

- Bert

********************************

The Philippines, the World Bank, and the Race to the Bottom
- Ellen Augustine

The World Bank made the Philippines a test case in its loan-based, export-led development strategy --and the results were dictatorships, poverty, and a crushing debt burden.

The early 1970s. The Vietnam War is in the headlines daily. Mass demonstrations are rocking the world. Policymakers think in terms of the domino effect in the bitter struggle between communism and capitalism.

In the Philippines, strongman Ferdinand Marcos holds power, but there's a growing insurgency in the countryside. In the eyes of the United States and the World Bank (WB), Marcos is the only thing standing between one more country falling to the Reds in the Cold War.

Direct aid is one way to keep him in power. The other and more potent means is World Bank loans, with their oversight and conditionalities. With an American always the president of the World Bank, the United States got what it wanted --with disastrous results for the Philippines. 

But this time, thanks to whistle-blowers inside the World Bank, we can get an insider's view of how the development game is played and why the results are usually far from the official rhetoric.

America's Hidden Colonial Past

The US-Philippines relationship goes back a long way, though few remember the Spanish-American War from History 101. The US "purchased" the Philippines after defeating Spain in 1898. The Philippines had been under Spanish control for over 300 years, and Filipinos did not welcome another master. In fact, a provisional government led by Emilio Aguinaldo had been set to take power after assisting the US forces. 

Instead, the Filipinos have been swept aside and a bloody insurrection ensued, which was finally defeated after several years and the loss of at least 250,000 Filipino lives. The U.S. established a typical colonial relationship, with the Philippines exporting agricultural commodities such as sugar and importing American manufactured goods. In 1946, the U.S. granted independence --keeping 20 military bases, including Clark Field and Subic Bay.

During its rule, the U.S. allied itself with the country's wealthy land-owning elite, which maintained political power after independence. Coming from this strata, Ferdinand Marcos assumed the presidency in the 1960s. In a particularly corrupt and violent election, he secured a second term in 1969, in the process using up the government's foreign exchange reserves. Without reserves, the country was unable to cover a huge trade deficit and pay interest on mounting external debt.

Marcos turned help to the World Bank. One of its conditions for assistance was a 60% devaluation of the peso. In the 1970s, currency devaluation was the standard Bank prescription for Third World countries needing loans. In theory, this would bring the trading account into balance by increasing foreign exchange earnings from cheaper Philippine goods while decreasing outward cash flow, for now, more expensive imports. 

In fact, devaluation brought disaster to businesses and workers alike. Scores of Filipino entrepreneurs were thrown into bankruptcy when suddenly confronted with more expensive imported components for their products. (1) The wages of urban workers dropped as much as 50%. 

Years later the first draft of the Poverty Mission Report, leaked by whistle-blowers, identified this Bank-imposed devaluation as the key factor precipitating the decline in Filipino living standards --tough this admission was excised from the final version of the report. (2)

They Came, They Saw, They Liberated

The collision of the World Bank's macroeconomic policy and real people's lives was bloody and left a multitude of casualties. Currency devaluation is part of the broader policy of liberalization --sometimes called neoliberalism --which is both the standard precursor to structural adjustment loans and a continuing part of the structural adjustment package. liberalization is at the core of World Bank trade policies, for the Philippines as well as most other developing countries.

Liberalization can be a very confusing word. In common usage, liberal means "progressive, imbued with compassion for the less fortunate, and a willingness to put government resources into redressing past harms and creating social and economic equality."

But in modern economics, liberalization is quite different. Doug Henwood, economist, and publisher of the Left Business Observer explains it this way:

"Liberalization means removing any barriers to the efficient functioning of the market. That would mean eliminating trade barriers, eliminating obstacles to foreign investments, reducing the size of government domestically, and reducing the regulation of the economy. Basically, it means Reaganism: unleashing the magic of the marketplace. This might sound attractive to Americans, especially a lot of Americans who are opposed to state intervention and distrust of welfare states."(3)

The problem with the World Bank/International Monetary Fund model is that no country using it has ever developed successfully.

"The countries that have developed successfully over the last forty years have been those primarily in East Asia, whose governments took a very active planning role. They regulated imports, limited capital flows, regulated interest rates, and directed capital into preferred areas for development. China, the current star, has developed under the very skillful hand of the state, and it followed none of the standard policy prescriptions. So liberalization has a very poor track record. It's highly unusual for a country to develop successfully without some degree of protectionism."(4)

Not so long ago, the United States itself was a developing nation. Did its rise to prosperity follow the path recommended by the World Bank? Henwood recaps U.S. history:

"We violated all the laws we impose on countries today. We depended on protective tariffs into the early 20th century. We also violated all the intellectual property rights we now hold sacred. The U.S, chemical industry got started during WW1, when we stole the German patents. In the 19th century, U.S. publishers were notorious for republishing works of foreign authors without permission or royalties. Orthodox economics insists on letting the market work and subjecting domestic producers to foreign competition. but this is also the ideology of the strong. 

You want to prescribe free competition and liberalization when you're the big guy on the hill because no one can compete with you. So on the way up, everybody's a protectionist. but once you get to the top, you're a free trader. 

For rich countries like Japan, Western Europe, the United States, and Canada, open trade is fine. But poorer countries that are trying to develop cannot afford a regime of free trade. There's no way they can develop their own industries facing competition from the developed countries. It's not going to make the poor less poor."(5)

Export Processing Zones (EPZs): subsidies for the Multinationals

Another condition imposed by the World Bank for the loans Marcos sought was opening up the Philippines to foreign investment in the form of export processing zones (EPZs). A major zone was created across the bay from Manila. Incentives for foreign corporations included:

• Permission for 100% foreign ownership
• Permission to pay a wage lower than Manila's minimum wage
• Low rents for land and low charges for water
• Government financing of infrastructure and factory buildings, which could be rented or purchased at a low price
• Accelerated depreciation of fixed assets

These projects did not come cheap for the Philippines. One site alone, the model Bataan Export Processing Zone (BETZ), cost $150 million to develop, including a dam and water treatment plant. Overall, the Philippine government spent billions of borrowed money on energy, transportation, communications, water, and construction to entice foreign corporations. (7) 

Companies that made hefty profits in these EPZs included Texas Instruments, Fairchild, Motorola, and Mattel. (8) While the cost of export-oriented development was high for the Philippines, the commitment was low for the multinationals. Such an arrangement made it relatively easy for them to pick up and leave when workers demanded a more realistic wage --and that is exactly what happened

Play by the Rules --and Lose 

Export-oriented development is a key component of the World Bank's standard prescription for developing countries. Yet targeting the bulk of a country's borrowed money to support export-oriented development means that little is left to address pressing domestic needs. Doug Henwood explains how this plays out in a country such as the Philippines:

"Export-oriented development is still the absolute centerpiece of orthodox development theory. Countries like the Philippines have dire domestic needs that should take precedence over export-oriented development. There's just no way that they can meet the needs of their population under this model. It's economically unwise, but it's also a crime against humanity to put exports ahead of the needs of a very hungry and hungry, ill-educated population. 

"What you would ideally want --and what is not happening-- is for the multinationals to do some degree of skills and technology transfer, such as using Philippine engineers instead of importing their own engineers from home. They would start training the workers to do more and more skilled work rather than just routine assembly tasks. They would develop suppliers locally; components would be made where they're assembled. That's the way a country could use foreign investment as a real development strategy. This would also provide hard currency to service the loans --since World Bank loans can not be paid back in a country's own currency.

Local governments can't get much in the way of tax revenue out of these multinationals because they're getting tax holidays and paying very low wages. That's why, despite opening up to foreign investment and doing everything they're supposed to, so few countries succeed in this game. It's pretty much stacked against them. 

There are 120-150 countries competing on this model. They can't all export their way into solvency, much less prosperity. It's a very nice arrangement for the richer countries because they have all these poor countries desperately competing with each other to see who can provide goods most cheaply. There's no way you can get more than a minority of winners out of this kind of model." (9)

Clearly, the Philippines is not one of the winners.


next...The Dark Side of Globalization, Part 2 of 4

Source: A Game As Old As Empire - The Secret World of Economic Hit Men and the Web of Global Corruption, edited by Steven Hiatt, Berrett-Koehler Publishers, 2007

***********************************************************

PLEASE DONATE CORE SUBJECT BOOKS TO OUR HOMELAND (i.e. your hometown public schools, Alma Mater, etc.). Those books that you and/or your children do not need or want; or buy books from your local library during its cheap Book Sales. Also, cargo/door-to-door shipment is best.  It is a small sacrifice.  [clean up your closets or garage - donate books. THANKS!]

***********************************************************

" Fear history, for it respects no secrets" - Gregoria de Jesus  (widow of Andres Bonifacio)

"Those who profess to favor freedom
and yet deprecate agitation
are men who want crops without
plowing up the ground;
they want rain without thunder and
lightning.
They want the ocean without the
awful roar of its waters.
This struggle may be a moral one
or it may be a physical one
or it may be both moral and physical
but it must be a struggle.
Power concedes nothing without a
demand
It never did, and never will." – Frederick Douglass, American Abolitionist, Lecturer, Author, and Slave, 1817-1895)