Rethinking Finance


Though this article is slated for publication on Thursday, Sept. 23, I am reflecting on the day that I am writing this, September 21st, a day where we extend rethinking the capital markets towards re-examining major issues in our country and in the world in general. Today marks what is a dark day in the history of the Philippines, the anniversary of the declaration of Martial Law by Dictator Ferdinand Marcos in the year 1972. It is also the World Zero Emissions Day, which, while a great initiative, is yet another stark reminder of darker times to come with climate change. And it is also declared by the United Nations as The International Day of Peace. And while these three things do not seem connected on the outset, we all know that they are, and we need to attempt to understand our roles as economic actors in observing these three specific events. Today we rethink our economic situation vis-à-vis the situation during Martial Law.

While historians and political analysts are best placed to comment on the grave ills of Martial Law, suffice it to say that the economic impact of those two decades of plunder and violence are still being felt to this day. There are many who are recalling the Never Again and Never Forget hashtags to take stands in the upcoming elections, but many forget the economic problems faced then that seem to be not only haunting us today but threaten to be replicated.

On this same day last year, Ruben Almendras wrote in The Freeman that the economic justification for Martial Law was to promote faster economic progress. He said that prior to Marcos’ presidential election, GDP growth “ranged from 3.55% to 7.06%.” The Philippines was the 2nd economy to Japan in Asia. This continued towards the first and second terms of Marcos — until Martial Law was declared, which led to erratic economic growth rates, jumping up and down each year, from a high of 8.8% then progressively decreasing to -7.3% in 1984 and 1985, marking two full years of recession. This is not unlike what we are experiencing today. Though many things were external like oil prices, Almendras says that political pressure on economic decision makers and technocrats of the Marcos regime took away from sensible economic policies. Massive inflation (at one point hitting 62.8% in September 1984), excessive spending, and, of course, massive corruption ensued, and government investments were mismanaged. The final whammy was the heightened political risk which ultimately dampened the foreign investment climate. Infrastructure spending plunged to the lowest levels as the government was unable to pay its debts.

As decisions in the political arena have a direct impact on the economy, it is not enough to denounce Marcos’ scions or cronies out of mere conscience, although this is an excellent first step; but truly a better and quite clear way forward is to select a leader that will not burden the people with mismanaged amounts of debt. For we must keep in mind that the story of the Marcoses is not simply one of extravagance in buying shoes and art and smuggling cash in Swiss Bank accounts, it is much more sophisticated and complex that that; it is a master class on how the mismanagement of foreign investments, the dwindling reputation of political leaders, the threat to press freedom, and violence can cripple an economy almost instantly.

What then is our role as economic actors, as financial market movers, as investors, entrepreneurs? It is to understand and better educate the public on the impact of economic decision making, from the tax increases in tobacco and oil, the transport hikes, the imports of pork, the flight of the POGOs, the retail trade liberalization act, the lowering of corporate taxes — vis-à-vis, the impact on the bottom-line of firms, the impact on the competitiveness of the Philippines versus our Asian peers, the sustainability of operations from an environmental, social, and governance perspective — and how this bottom-line affects: the unemployment rate of the country, the brain drain from the flight of the OFWs, the poverty levels.

And it gets even more specific in the times of COVID, for our role is to explain the impact of the health spending and dwindling fiscal aid or ayuda on the productivity of the labor force, on the ability to maintain the economy open and running; The impact of keeping classes closed on the earnings of graduates in the future and how this severely limits their prospects. The impact of lockdown policies on the ease of doing business in the Philippines and attractiveness to foreign investors. The impact of infrastructure spending and the slow pace of construction on ballooning debt. And the idea of banking on short-term gains, remittances, BPOs, to save us instead of sound government policies.

These are all issues that can be brought to light and better addressed in this period, this is an opportunity to debate, to compare the difficulties economically then with now, and this is the time to take courage to learn from the past, from the dark past, but also from the highly avoidable pains of a rough economic past.


Daniela “Danie” Luz Laurel is a business journalist and anchor-producer of BusinessWorld Live on One News, formerly Bloomberg TV Philippines. Prior to this, she was a permanent professor of Finance at IÉSEG School of Management in Paris and maintains teaching affiliations at IÉSEG and the Ateneo School of Government. She has also worked as an investment banker in The Netherlands. Ms. Laurel holds a Ph.D. in Management Engineering with concentrations in Finance and Accounting from the Politecnico di Milano in Italy and an MBA from the Universidad Carlos III de Madrid.