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UNDERSTANDING CORRUPTION 3

November 28, 2012

Understanding Corruption 2

To illustrate the complications of a strictly-no-corruption policy in a corruption-laden setting, let us take for example the President’s much- vaunted multibillion peso Public-Private  Partnership (PPP) initiative.  Once  touted the core component of a strategy to jumpstart economic activity, the entire program is practically at a standstill,  more than two years into the six-year term of this administration.  Hundreds of billions of pesos pouring into government projects  with private enterprise investing in matching proportion would certainly cause an expansion of G and I, and indirectly into other variables too, resulting in an enormous expansion  of GDP.    So why is PPP on sleep mode?   Well, because the very laws that seek to tighten control over corruption are the very same laws that now hold up the entire process.  (Or read another way, the levers of power controlling the process flow as dictated by the law would not move –unless “greased”.)  And interestingly  because the government rose to power on a campaign of clean government, it  understandably wants to maintain that image of supreme clean at all cost.  Great.  But for that reason ironically not one of the projects under the PPP scheme might materialize at all.    If the assigned implementers take the no-risk, better-nothing-at-all-than-be-tainted-with-corruption posture, there goes PPP.  Better no bridge than be accused of abetting thievery.  Better no road or highway ...  Mind you, this sentiment does find favor in a broad sector of society.  Thus, this war on corruption could take a turn to a gross disadvantage because of a highly control-oriented system developing alongside an image-conscious government which considers delivering results secondary.

Let us take a look at the equation again.  Our equation GDP =  C  +  I  +  G  + (X-M)  is pretty uncomplicated  a mathematical formula it  actually gives a simple, straightforward view into how the sum would grow or drop.  It means that any increase in the value of all variables, except M, would expand the sum GDP, and conversely, any decrease would mean lesser sum GDP.   See, this is not even Calculus.

Since corruption necessarily involves Government and the private sector,  for a start,  one needs to inquire closely how corruption could actually hold back or diminish the aggregate values converging at I and G.  What elements and factors are actually contributing most to their decline or weakening, or to sluggish build up?  What theoretically could contribute to their upsurge or expansion?

Over the years, when questions about the lethargic growth of the Philippines pop up, the answer that leaps out every time , almost by reflex, is Corruption.   Is it?   Every so often, I have risen to question the wisdom of this assertion at the risk of being labeled a defender of the corrupt.   I argued that corruption is more a symptom than the disease.   On the whole, corruption spring from utter lack of opportunities to make a living and/or build a better life.   Survival instinct and the normal desire for relative comfort do tend to slacken people’s sense of honor and decency, in times of need and scarcity.  This is not saying greed has no place in the picture because the greedy ones will always be corrupt.   But the true aggravation befalls when even the good guys have started joining the fray.  My contention is that people in general would choose to get out of a no-win no-opportunity situation and seek out better deals for themselves if they see accessible opportunities elsewhere—  rather than trade their sense of honor.   So the problem of corruption would be diminished greatly not by laws designed to contain it but by economic opportunities that provide alternative.

Graft and corruption have been tagged the culprit of our poverty and underdevelopment since we could remember.   As a consequence, our economic policies remained fundamentally unchanged for decades because we believed the policies were correct and the only one spoiling our march to progress was graft and corruption.   In fact, blaming policies was tantamount to blaspheming that wisdom.  Such a mindset of course finds resonance in  slogans like “Kung walang kurap, walang mahirap” and the common people lap it up:  Corruption, my friend, is the problem; we eliminate it, and voila we are on the way to being a First World country.   Oh well.

A good analogy would be a headache caused by a tumor in the head.  Because a pain reliever suffices every now and then, suggesting it works, it is mistaken that the disease is a simple headache and the pain reliever is the cure.  But you have to wonder, if the headache continue recurring over days and weeks and months, something else must be wrong.

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