Knowledge is Power

Knowledge is Power

Two Good Reads on the “Golden Years”

November 27, 2022

Reader, if you want to find out for yourself the truth about the Marcos dictatorship and/or whether or not those years could be considered “GOLDEN YEARS” as far as the Philippine economy and its polity are concerned, there are two documents that will give you very hard evidence on the matter, and which are available on the interne (links below) .

The first is  “An Analysis of the Philippine Economic Crisis”, edited by Emmanuel de Dios, a report based on the results of a series of workshops held between Nov. 1983 and May 1984 participated in by ten faculty members of the UP School of Economics (myself included) and published in June 1984. The authors are Dante Canlas, Emmanuel de Dios, Raul Fabella, Felipe Medalla, Solita Monsod, Manuel Montes, Vicente Paqueo, Eli Remolona, Edita Tan, and Rosalinda Tidalgo. There was an eleventh very active participant in these workshops, and that was our Dean, Jose Encarnacion, but his name was not included in the list at his bequest:  he wanted to protect the School from any negative fallout from the publication of the report, which subsequently became known as the “UP White Paper”.

It is important to note the events immediately preceding and during the writing of the White Paper: Senator Benigno Aquino had been assassinated three months previous (August); the Philippine government in October declared a 90-day moratorium on payments on principal on its foreign debt, imposed foreign exchange restriction, and devalued the peso by 21.4% (from P11=$1 to P14=$1), which was additional to two other earlier devaluations that year); there were signs of increasing social unrest in the form of street demonstrations against the dictator; and there was the election campaign for the 1984 Batasang Pambansa Elections. 

I cannot speak for my colleagues, but as far as I was concerned, the Aquino assassination was a defining moment in my life.  I would never more, after this, be a silent (and therefore acquiescent) spectator to the actions of any administration, starting from the dictatorship.

The Philippine debt crisis caught me completely unaware as an economist, because the balance of payments and other reports of the Central Bank (CB) the most recent being three months before the moratorium declaration, showed the Philippines was in a healthy condition, as indicated by its debt service ratio, which was by legal statute limited to 20%. And that threshold, up to the debt crisis, was never reached.  

It turned out (this is reported in the White Paper) that the Central Bank had been changing definitions so as to make the numerator of the debt service ratio look very small and the denominator look very large.  The changed definitions were all explained in footnotes, but nobody, at least not I, read those footnotes until the White Paper. And as it also turned out,  the CB was also whitewashing other data (overstating its international reserves and understating its debt), and this came out when  a CB official “confessed” to the IMF what was going on.  The CB Governor (Jimmy Laya) offered his resignation, which was refused.  But the dictator later “promoted” (the President’s word) him to the Ministry of Education.  Other examples of attempts to whitewash data (or make them disappear) are given in the White Paper.

The dictatorship’s spin on these two events was that the Aquino assassination caused the Philippine debt crisis. Nonsense. That would be a prime example of the post hoc ergo proper hoc fallacy.  The crisis was inevitable as shown by the data in the White Paper, and the second document I was telling you about.  What the assassination did was to heighten the suspicions of the international community about the credibility of the Philippine government — because the government loudly denied its involvement in the assassination.  That was clearly incredible (only consider:  the airport was locked down, the military were crawling all over the place and yet Aquino was not allowed to disembark with the other passengers.  They took him out by another set of stairs, where he was a convenient target for the “assassin”).

The second document available in the internet is UPSE Discussion Paper written by the same Emmanuel de Dios, Socorro Bautista, and JC Punongbayan (UPSE DP 2021-07) entitled “Martial Law and the Philippine Economy.”  With the advantage of 20-20 hindsight allowed by a 37 year time difference, it elaborates on, expands, updates, and validates the White Paper. Excellent and extremely reader-friendly. 

Happy reading, Reader.


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