Beating Corruption in Philippines
Image Credit: Mike Gonzalez

Beating Corruption in Philippines


The issue of corruption in the Philippines has once again hit international newspapers with reports that the chief justice of the Supreme Court, Renato Corona (currently undergoing an impeachment trial before the Philippine Senate), had dozens of dollar accounts with millions of dollars flowing through them. Of course, reports on corruption are continually in the Philippine media.

As I have quoted the Political & Economic Risk Consultancy (PERC) before, “the media, even more than the courts, is the forum in which all sides try to wage their battles of defamation.” I’ve repeatedly written about corruption, and The Asia Foundation has supported efforts to bring more clarity to the discussion – to go beyond politicized battles – most thoroughly represented in the book by Michael Johnston.

A year ago there was another impeachment case against the former ombudsman (anti-graft prosecutor) that led The Economist to ask cynically, “Progress or Payback?” Now, one year on, we are faced with the same conundrum: Is the trial of the chief justice part of a political vendetta (since he was perceived to be protecting former President Arroyo), or just the next logical step in removing blockages to President Aquino’s successful 2010 campaign slogan, “If there’s no corruption there’s no poverty?” The plain fact of the matter is that for those outside a small circle of decision-makers it’s impossible to tell. An optimistic read could point to broader bureaucratic reforms (to which I’ve pointed in analyzing presidential power) while pessimists might cite PNoy’s alleged favoritism to classmates, friends, and shooting buddies.

The purpose of this blog isn’t to argue either the pessimistic or optimistic case. Rather, it’s to try to better understand the political economy structure of corruption so as to be able to point to some directions forward.

A long-standing starting point for understanding the logic of corruption is Robert Klitgaard’s formulation: C = M + D – A (Corruption = Monopoly + Discretion – Accountability).

That is, when someone has the monopoly over decisions on how to do things (hire people, contract roads, purchase supplies) and a wide range of discretion in making decisions, there’s likely to be more corruption – which can be reduced by introducing accountability mechanisms like transparency of information, independent audits, and the like. Using this heuristic, the Foundation has supported partners in the Philippines working on procurement (particularly with the Departments of Education and Health), cities whose mayors wish to reduce corruption so as to be more investor-friendly, and general civil society (including business associations) efforts to increase accountability.

A recent paper introduces a considerably more complex formal model that includes a bureaucratic decision-maker, different types of clients with differing willingness and ability to pay, and variations in rules about prices, testing, and allocation of the (abstract) good being provided. A warning to fellow non-economists:  slogging through the equations and derivations can be slow. The general logic is clear and some of the implications are interesting, such as the suggestion that “red tape” is more likely in governments serving the poor since poor people have less ability to pay than what a service is worth to them (and thus are more willing to endure red tape).

In checking the formal abstract model against what is known about corruption in the real world, the authors note success stories such as those related by Klitgaard. As is the experience with our programming in the Philippines with cities or government agencies, these anti-corruption successes “all seem to involve a person at the top of each institution who was eager to implement” reforms. But then the question arises: why aren’t such examples more frequent or sustained?  Why don’t leaders pursue these reforms more often?

Politics, of course, is the answer. Repeatedly, in the Philippines it has been demonstrated that reducing bureaucratic corruption in particular agencies, or in particular cities, is possible with the cooperation of the leaders at the top and in partnership with citizens, businesses, and NGOs. But such successes do not yet seem to touch political corruption – the use of corruption to gain, keep, and exercise power as witness the “hello garci” scandal regarding the 2004 election in the Philippines and the continued pervasiveness of money politics. This is where the analysis of Michael Johnston is valuable in laying out the logic of “Oligarchs and Clans,” which is the political economic situation in which the Philippines finds itself. This is where corruption is the most harmful to economic growth since decisions or policies of one administration tend to be arbitrarily overturned by a subsequent one (even within presidential administrations as one faction takes over, for instance, a department and uses it as a platform for the next electoral cycle rather than technocratic policy-making).

Johnston’s medium-to-long-term prescription is rooted in the need to change the relation between citizens and their elected officials. Under Oligarchs and Clans, voters tend to reward particular favors (from purchased votes to paying health expenses) rather than effective performance in managing government and delivering service. He suggests an indicator and benchmark strategy that picks services important to people (for example, education or health), develops indicators of good performance, publishes them against benchmarks, and helps citizens hold officials accountable. In a sense, this is adding direct governmental involvement to some of the ideas involved in “social accountability.”

A recent book, The Institutional Revolution by Douglas Allen, studies the effect of better measures of performance to explain changes in institutions (such as the military) at the beginning of the industrial era in Britain (roughly 1780 to 1850). For example, purchase of offices used to be the accepted method of staffing a bureaucracy, but after time, distances, tasks, and talent became more accurately measured then meritocracy could become a viable recruitment strategy. In Allen’s historical account, the “sovereign” using benchmarks and indicators was the Crown. In the current version, Johnston is proposing to “deepen democracy” in order to empower citizens to hold government accountable against objective measurements.

Put this way, reducing both the demand for and supply of corruption can take decades. With the modern pace of politics, the campaign for the May 2013 midterm elections (regarded as a rehearsal for the 2016 presidential elections) is already heating up. Necessary as it might be, designing and implementing a long-term strategy is a daunting task.

Steven Rood is The Asia Foundation’s country representative in the Philippines. He can be reached at [email protected] The views and opinions expressed here are those of the individual author and not those of The Asia Foundation. This article originally appeared at the Asia Foundation's site here.

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