Taking sides
In our last meeting in Globalization & Development, the class was divided into two. One side of the class is where those who believe in the neo-liberal project as a solution to poverty sat. The people on the other side did not believe in the solution. I was seated on the side who believed in neo-liberalism. Honestly, I was one of the many who, at the time, did not have a clue on what neo-liberalism is and what it has to do with poverty. Scanning my notes, I saw the name Karl Marx and the term “laissez faire”. These things I’m quite familiar of. I began to see the connection.
After the session, I started gathering arguments for the two sides and found myself leaning on to the other side. I actually don’t think neoliberalism would be a good solution to, of all things, poverty. Our professor said the neoliberal project is idealistic. I think both situations, neoliberalism and government intervention, are idealistic.
The connection
Liberalists believe in free market. On the other hand, the Keynesian economists believe in government intervention through policies that ensure economic stability. I think both ideas can ensure development but are both inconceivable when implemented separately. Entirely eliminating government control would enable giant companies to monopolize the market, dictate prices and widen the gap between the poor and the elites. What is presently implemented in majority of the countries is a combination of both.
The government is tasked to regulate the dictating power of firms, ensure that there is competition so firms would strive to compete in terms of quality of products and services, protect workers from abusive employers, protect local businesses from non-state actors, etc. Also, a free market has been adapted gradually. As globalization became widely accepted, free trade gained popularity and even our country succumbed to the trend. In 1992, we signed up for AFTA(ASEAN FREE TRADE AGREEMENT). Over decades, Philippine relations with the United States led us to lower our trade barriers. Almost all of our industries have been open to foreign investors, even the power sector. More investors could have meant more financial resources for the country. That was the idea. Apparently, they get more than what they pay us for. It is either our laws are still not good enough to guarantee that we will receive enough payment to compensate for the lost opportunity we could have given to local businessmen, or we have good policies but corrupt implementers.
The verdict
Free market just won't work. Some say that if we allow firms to profit as much as they can, more jobs will be generated. Presently, laws protecting workers are implemented but the number of firms who actually respect these rights are relatively low. An established firm in the Philippines avails of contractual labor to avoid giving out incentives and to be able to easily decrease hired workers whenever they need to. This is a fact most people are aware of. Now, many more firms are doing the same.
Internationally, liberalism in the form of free trade would only aggravate the economic condition of developing countries like the Philippines. We only continue to be consumers of other countries' goods. I remember looking for a pancake mix in the grocery store. Comparing the prices, the imported mix costs much less than the local one. If I had not tasted the local product, I would have bought the imported one which is cheaper.
Complete government control over the market is not good as well. Even now that our policies seem to be enough to regulate those who abuse power over their workers and their dictating power over prices, government officials can still be bribed. I learned from a professor that a friend of his, an owner of a small-scale mining company, has to give 8 million pesos to government officials each year to stay in the business.
I guess, when Filipinos learn to know the boundaries of "utang na loob" (sense of gratitude or reciprocity), when Filipinos no longer tolerate their friends' malicious acts for friendship's sake, and when laws and justice can no longer be bribed, we can get out of poverty. We suffer because our leaders are cuffed by the business people who financially supported their candidacy. We suffer because abusive business people escape proper sanctions by buying themselves out of the hands of law. With or without government intervention, poverty will exist if we lack cultural reform. For now, all I can do is share my knowledge, donate some of my stuff, patronize local products, and other little things that can help the poor.
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