Saturday, May 8, 2010

Ego Economics

In a prior commentary, I criticized the “trade of favors” that is undertaken by those in power as they obtain personal enrichment by leveraging their power. I questioned how the Philippines could ever expect to achieve anything but mediocrity if appointments don't focus on skill and instill ambition as the driving force in economic production. If the standard is to appoint wives and uncles and those you owe favors, or from whom you expect favors, how will the nation ever develop competence? If the standard is to give out Farm to Market roads in exchange for political loyalty, how will infrastructure investment ever get directed to highest and best use? If the standard is to add large percentage kickbacks for construction projects, how will the financial return on investment ever reach a positive number?

Well, as Don Quixote's loyal sidekick Sancho Panza would observe, “the proof is in the pudding” (apology to thenashman). Sancho never met a trite wisdom he couldn't wing into the conversation. And pudding it is . . .

In the Philippines, excellence refuses to reign. I'm confident you are as tired of dessert as I am. Poverty pudding. Corruption pudding. Pollution pudding. There can be no doubt that the public's investment is going places other than to public good.

Nowhere have so many decent and intelligent people backed by a reasonable constitution bowed so low to the whims of the powerful. And been taxed out their earholes to make up for the financial transgressions of those responsible for the integrity of the nation's fiscal dealings.

In successful capitalistic societies, the drive to be efficient and create profits assures excellence. You can only compete if you hire the best and invest wisely. The entire social architecture is competitive and ambitious, always driving toward better performance. Government must itself create value. The agency that slacks off will get publicly reamed six ways from Sunday (thank's, Sancho); its Director will be fired and new operating rules will be put in place to right the listing ship. The public is empowered by the constitution and a justice system relentless about righting wrongs, not emasculated by those who circumvent good by trading in favors.

In the Philippines, the systematic method whereby investments are made and public funds spent is “ego economics”. The financial rigor of most investment deals would not stand up to an accountant's inspection. It doesn't have to. Those in power paper over the lousy financial returns with words. And cover their tracks with IOU's and favors. Dean De La Paz recently explained how the approved budget to build more electricity generation capacity on Mindanao is sufficient to generate 400 megawatts of power, but the expectation is that only 160 megawatts will be obtained.

The national highway is an economy-busting, traffic-jammed slaughterhouse of dogs, chickens and bicyclists, but infrastructure money goes to concrete strips across the rice paddies, used by an occasional water buffalo. You see, the “Farm to Market” concrete gets the local legislators re-elected, and they perform like the indebted ratpack they are, so many toadies kissing the queen's behind.

You don't need excellence to stay in power. You don't even need a sound economy. You simply need to be able to get and give favors. That is the primary currency. Favors and power. Ego economics.

Sancho again: “You pat my back, I'll pat yours.”

In ego economics, the measure of success is “return on favors”, measured by the duration and weight of power achieved. The skilled practitioner does not need to worry about the rigors of accounting, for the books are balanced out with favors.

Cooked”, Sancho would say.


  1. Pinoy politicians, lawmaker, pions, anybody who runs for office are all ego trips. They forget to serve the people. Once they are elected or put to the position, they start keeping up with the Joneses, forgeting their duty. Ego maniacs! self serving!

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