The Truth About the Economy Under the Marcos Regime

Posted on November 15, 2015 10:58:00 PM
Introspective
Emmanuel S. de Dios

Nearly three decades after it ended, still no proper account has been written of the economy under authoritarian rule, which is a big reason that Millennials have only an inkling of what transpired during those years. It is also why one now hears the mind-blowing judgement that “Marcos was the best president the country ever had.” And if you ask Millennials today who in their mind was the country’s worst president, their likely answer is “Gloria Arroyo.” (Sigh.)

This is obviously no place to write an economic history (hanc columnis exiguitas non caperet). But there may be enough room to correct a few bad habits when thinking about the Marcos period.

A common foible is selectivity: Marcos-admirers wax nostalgic about the “earlier years” of martial law but forget its later consequences. Ah, yes… remember when order and discipline seemed to reign, grand industrial and infrastructure plans were in the works, governance was discharged by a simple snappy salute, newspapers carried no muckraking reports about corruption, spanking new hotels were on the rise, a glittery cultural scene was on display, and foreign celebrities, bankers, and business people regularly came in and out — not to mention the beauty pageants! What was not to love?

The customary counterpoint to this has been to cite the gloomy human rights record: arbitrary arrests, disappearances, suppression of dissent and civil rights, and the brutal war on Muslim rebels in the south. But all this is typically swept aside by the regime’s lovers as being the “necessary cost” of all that economic progress — and in any case, it is argued, these were just the concern of a few Leftist activists and some collateral victims.

That argument might hold some plausibility if the economic record was brilliant to begin with. But it was not. And here one needs to underscore the importance of assessing the entire period of authoritarian rule, from late 1972 to early 1986.

Take gross domestic product (GDP) for instance: the average GDP growth rate from 1972 to 1985 (Marcos’s last full year) was all of 3.4% per annum. Per-capita GDP grew annually at less than 1% average over the period — more precisely 0.82%. Hardly a roaring-tiger performance. At that rate it would have taken 85 years for per capita income just to double.

For comparison, the average GDP growth from 2003 to 2014 — even under a bumbling and quarrelsome democracy — has been 5.4% per annum — with a rising trend. On a per capita basis, GDP today is rising 3.5% annually, more than four times the growth rate under the dictatorship.

The reason for the dismal performance under martial law is well understood. The economy suffered its worst post-war recession under the Marcos regime because of the huge debt hole it had dug, from which it could not get out. In fact, all of the “good times” the admirers of the regime fondly remember were built on a flimsy sand-mountain of debt that began to erode from around 1982, collapsing completely in 1984-1985 when the country could no longer pay its obligations, precipitating a debt crisis, loss of livelihood, extreme poverty, and ushering in two lost decades of development.

The economy’s record under Marcos is identical to that of a person who lives it up on credit briefly, becomes bankrupt, and then descends into extreme hardship indefinitely. It would then be foolish to say that person managed his affairs marvelously, citing as evidence the opulent lifestyle he enjoyed before the bankruptcy. But that is exactly what admirers of the Marcos regime are wont to do.

It is instructive that neither Thailand, Indonesia, Malaysia, nor any major Asian country catastrophically experienced negative growth in the early 1980s. The Philippines was the exception, following instead the example of protectionist and over-borrowed Latin American countries. This suggests that there was nothing unavoidable about the crisis the Philippines suffered, and that it was the result instead of failed policies. In 1977 the Philippines’ total debt was all of $8.2 billion. Only five years later, in 1982, this had risen to $24.4 billion. Thailand’s debt in 1982 was still only half that amount. Thailand and other countries of the region thus avoided a debt crisis and ultimately went on to attract foreign direct investments in export-oriented industries in the now-familiar East Asian pattern. But no such thing happened under Ferdinand E. Marcos, notwithstanding the arguments and exhortations of people like Gerardo P. Sicat (who would cease to be active in the regime by 1980). By the early 1980s, the pattern would be set where foreign direct investments in neighboring countries regularly outstripped those in the Philippines. (The intermittent coups d’etat post-Marcos did us no favors either.)

All this should correct the common misconception that the country’s troubles stemmed entirely from conjunctural “political factors,” notably that it was caused by ex-Senator Benigno “Ninoy” S. Aquino, Jr.’s assassination. One might not even entirely blame the mere fact of authoritarianism itself — after all Thailand, Indonesia, and Malaysia at the time were also ruled by despots of some sort or other, yet suffered no crisis. Rather the Philippine debacle was linked to the misguided policies that were structurally linked and specific to Marcos-style authoritarianism. For all its technocratic rhetoric and rationale, the Marcos regime never took economic reform, liberalization, and export-oriented industrialization seriously; it remained a heavily protectionist and preferential regime (think the cronies and the failed major industrial projects). The availability of easy loans was well suited to the priorities of a regime that thought it could stoke growth without deep reform and slake the greed of Marcos and his cronies at the same time. In the end a corrupt regime fell victim to its own hubris.

In three decades more, the whole Marcos episode will probably be regarded as no more than an avoidable nightmare; a wasted opportunity; a bump on the road on the country’s ultimate march to development.

But this narrative, for different reasons, is unpalatable to many of the regime’s lovers.

Indeed, one of the “alternative truths” propounded by some otherwise respectable people is that the fatal flaw of the Marcos period was really just the fact that Marcos failed to provide for a proper succession — as if the regime’s logic of patronage would have allowed it to behave otherwise.

A more pedestrian version of it, however, simply says Marcos gave Imelda too much power. The story runs as follows.

There were really two Marcoses: Marcos B.C. and Marcos A.D., i.e. “before concubinage” and “after Dovie” (kids, you can ask your grandparents what this refers to).

Marcos B.C. was a statesman, out for greatness for himself, brooking no deviation from his vision of the nation’s future.

But Marcos A.D. was a weakling hostage to his vengeful wife, who exacted inordinate power as the price of the discovery of her husband’s indiscretion. It was she and her obscene taste for extravagant projects that caused the country to run huge debts; she and her ambition and greed that skewed policy making and ruined the chances of an orderly political succession. Imelda in short was the real villainess; Marcos by contrast was little more than a hapless victim of spousal politics, a tragic hero ruined by guilt, having falling victim to that all-too human weakness — the need for love! It’s an almost Shakespearean story (think Antonius and Cleopatra) of an entire nation’s fate being determined by human passions and foibles.

For some, this “alternative truth” will continue to be more riveting than any dry economic history based on real facts and hard economics. (Sigh.)

Emmanuel S. de Dios is an Oscar M. Lopez professor at the University of the Philippines School of Economics and a fellow of Institute for Development and Econometric Analysis (IDEA).

ededios@gmail.com

http://www.idea.org.ph

SOURCE: http://www.bworldonline.com/content.php?section=Opinion&title=the-truth-about-the-economy-under-the-marcos-regime&id=118661

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