Epiphanies and the pandemic

A shock to a society has a way of producing epiphanies, i.e. the sudden realization of the truth, and forcing big changes. World War II, for example, ushered in an era of liberalism, multilateralism and economic interdependence because the beggar-thy-neighbor policy of the previous era was seen as a contributing factor to the war. The European Union in which the disparate countries of Europe would be tied together by economic interdependence and free mobility of people, was a reaction to the dangerous nationalism in Western Europe prior to the war.

We are now in the midst of another major shock — a pandemic that is ravaging the economy and people’s lives. It’s too early to say what dramatic changes it will force on the world and on Philippine society. We have glimpses — for example, the recognition that only the government can handle a big crisis or that inequality can make pandemics worse.

To me, the crisis has brought epiphanies. We can see our system under severe stress and its weaknesses are made obvious. Also, it reveals perhaps an agenda for change when the crisis blows over. Whether others see these weaknesses and whether society acts on them, is a different matter. Here’s my list of epiphanies for now.

1. The need for a National ID system — During the lockdown, there was a lot of talk about giving targeted subsidies to the poor and vulnerable at the soonest possible time, given that the lockdown cut off the poor’s access to their livelihood. However, there’s no easy and fast way of doing that. The Department of Social Welfare and Development (DSWD) supposedly has a list (Listahanan), but it doesn’t cover everybody and it has to be vetted for authenticity. I understand the ideologue in charge of DSWD under Duterte tried to undermine the system.

Even if the list were genuine, there was and is no way of sending them targeted subsidies quickly. The Land Bank monopoly on Pantawid Pamilya transactions had stifled innovations in paying them via phone credits, for example.

Although we have a National ID law, the system has yet to be rolled out. After much delay, the government pivoted away from a PPP project and instead decided to do the National ID on its own. Not surprisingly, nothing has happened yet.

Another weakness of the law is that the National ID is voluntary and not mandatory, perhaps in a nod to civil liberty concerns. However, the downside is that not everybody will be covered and data would be lacking.

Another improvement to the National ID law should be to include juridical persons, and not just natural persons. This means that corporations, proprietorships, non-profit organizations, etc. would be given a national ID. Again, if we had these data, it would be much easier for the government to extend loans or guarantees to specific SMEs and industries.

2. Need for tradable industries, specifically manufacturing —  Our weak manufacturing sector is a national security risk. The country only has one factory producing masks. It’s located in the Bataan Export Processing Zone, producing masks for export. Had we a strong and vibrant garment and textile industry, for example, we could mobilize the industry to manufacture face masks, hospital gowns, and other personal protective equipment.

For far too long, we had allowed services to drive growth. President Duterte bet on another service sector —  POGOs — to increase revenue and growth, but ignored the costs of having almost half a million Chinese working on an industry that is likely controlled by Chinese criminal gangs.

Services have lower productivity than manufacturing and won’t do much to lower our widespread poverty. It’s about time the government focuses on removing the constraints to investments in manufacturing, from the rigidities in the Labor Code to high shipping and logistics costs.

Also, the importance of agriculture is not far behind manufacturing. We need massive investments in food production. A lot of people are hungry now and will grow hungrier still. Climate change, not just the virus, is a threat to food production. It’s time to lift the hectarage limitations in the Comprehensive Agrarian Reform Law to encourage agribusiness investments, possibly in exchange for condonation of agrarian reform beneficiaries’ debt to the Land Bank.

3. The importance of basic industries —  The crisis has highlighted the importance of basic industries —  power, telecommunications, water and sewerage, shipping and transportation. The fact that we still had power and telecoms during the lockdown allowed at least some segments to continue functioning. But we are heading into the summer with a water shortage, undercutting the government advisory of frequent handwashing to reduce virus transmission.

The government should immediately resolve its dispute with the water concessionaires and enlist them in an emergency plan to increase water production and distribution. All ideas to strengthen our basic industries should be on the table. Lifting the restrictions on foreign ownership in the Constitution is one. We may also need foreign capital to save our airlines. Passing the Open Access in Data Transmission Act will also enable more players into the broadband space, strengthening the nation’s capacity and redundancy in offering broadband services.

4. The need for urban planning —  When people are forced to live far from their work and when mass transport is prohibited, this situation leads to people being cut off from their main source of livelihood. Therefore, when the government imposed a lockdown on Metro Manila and prohibited outsiders from entering, the edict essentially condemned millions of workers to hunger and privation.

In an article on CNN Life, urban planner Regine Andrea Palma wrote of the need for urban design that promotes seamlessness and public health and sanitation. “Too many developments in cities are gated towers and subdivisions, which disconnect from surrounding street patterns, creating segregation instead of seamlessness in the urban fabric. Cities do not encourage or analyze housing typologies, which has led to overcrowding and risky, annexed stories in more organic areas. Public amenities such as seating, public restrooms, wash areas, and trash bins — all of which are very basic in urban design — contribute to health and sanitation, but are rarely present in our urban centers. Accessible, open spaces, which should function as a reprieve for the metro’s compact areas, are glaringly scarce.”

5. The need for a balanced foreign policy — The pandemic has laid bare the risks of President Duterte’s one-sided, all-out embrace of China. Not only has President Duterte’s slavish, pro-China foreign policy made the country vulnerable to the pandemic by his Health Secretary’s initial refusal to ban flights from China, but also weakens the ability of the country to get help from all nations.

For example, there is a race among China, United States, and Germany to develop the first vaccines. What if the United States or Europe get to be the first? Shall we be given preferential access among other nations? President Duterte has told the Americans to go home with the termination of the VFA. He has also alienated Europe by cursing the EU for supporting human rights amidst his bloody drug war.

We also have weak or no capacity to produce our own testing kits, ventilators, personal protective equipment, N95 masks, and drugs. As a developing nation with few resources for public health, we will be dependent on other nations for some time.

6. Need for a competent, efficient, and professional bureaucracy — The reason Hong Kong, Singapore, Taiwan, and South Korea have managed so well during this crisis, despite their close economic ties to China, is that they have efficient bureaucracies which acted quickly and smartly to the pandemic once they learned of its eruption in Wuhan. As I explained previously, these countries have outward-looking economies and developed professional, efficient bureaucracies.

On the other hand, we have a politicized, inefficient, and corrupt bureaucracy, probably a legacy of our rent-seeking, inward-looking economy. Also, when our elite are into regulated industries — banking, power distribution, water, ports, shipping, etc. — there’s an economic incentive by the elite to weaken and “capture” the regulator. Thus, our bureaucracy not only failed to warn us, but also failed to prepare properly, even when the country had two months advance warning that an epidemic could reach our shores.

During the lockdown, the government welfare agencies were absent, and the task of feeding the poor fell to Local Government Units. The National Food Authority failed to use its buffer stock to distribute to the hungry and needy.

We need to do something about our bureaucracy. It’s not just a matter of raising their salaries — in fact, salaries for some government positions are now even higher than those in the private sector, e.g. lawyers. Instead, we have allowed the bureaucracy to be politicized, enabling the President to appoint even to the sub-director level. We have to change the culture of bureaucracy toward meritocracy and public service, as it is in Singapore and Taiwan.

7. The need to invest more in public health — There’s an obvious need to invest more in public health. While Congress recently passed the Universal Health Care law, it hasn’t been implemented yet and given the recent scandals of fraud in Philhealth, it’s doubtful if the Law can fulfill its promise. Perhaps, the law should be re-designed with private sector participation because the private sector has the expertise and incentive to better implement the law.

Will this crisis be transformational for the country — enable it to make the big reforms needed? Or will it just be an opportunity for the politicians to abuse their power? Those are the questions that remain to be answered.