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Greed and wrong economic policies
Caritas Manila marks 62nd year
(A historical perspective)
Rev. Fr. Antonio Cecilio T. Pascual
SERVANT LEADER
Cecilio T. Arillo
database Conclusion
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RIVATIZATION of the power sector has failed to ensure public benefits as promised, as shown by the experiences of New Zealand, the United States and countries in Latin America and Asia. In many cases, the reform programs created more problems for the sector itself, consumers or whole communities.
In the past five years, the world witnessed a series of disastrous blackouts, skyrocketing power rates, increasing corruption and financial problems in the sector. For example, serious brownouts in some parts of the US over the past three years brought to light the grim consequences of deregulation and privatization of the power sector. In the Philippines the main impact of power privatization, particularly during President Ramos’s administration, was, and still is, the stark increase in the cost of electricity. There are two sources of the increase in electricity rates: (1) the Purchased Power Adjustment (PPA) and (2) the application for rate by local distribution utilities (DUs). The PPA is actually a combination of purchased power-cost adjustment (PPCA), fuel-cost adjustment and foreign-currency exchange adjustment—all privileges extended to independent power producers when the government contracted them to generate and supply power under power purchase agreements. Distribution utilities, like Manila Electric Co. (Meralco), also charge consumers the cost of National Power Corp. and the distribution utilities’ contracts, which contain onerous “take-or-pay” provision, meaning that all contracted power is considered sold, and shall be paid for by consumers, whether this is used or generated, including the fuel which is purchased in US dollars. Consumers have been paying for fuel-cost adjustment and foreigncurrency adjustment since 1994. In 1996 the government started charging the PPCA and since then, the PPA has consistently been on the rise. Last year electricity charges had been unbundled as mandated in Electric Power Industry Reform Act (Epira). Conveniently, with rates now unbundled into major services, the PPA is no longer to be found in the monthly electric bills but continues to be subsidized by consumers as part of the generation charge. Aside from the PPA, rising electricity costs have also resulted in rate increases filed by local DUs or rural electric cooperatives (RECs). The Energy Regulatory Commission studies, approves and implements the collection of the new rates. This situation perpetuates monopoly pricing. For one, Meralco, the biggest DU, has succeeded in clinching successive rates increases using Epira to legitimize collection and recovery of costs for its expensive power contracts. Meralco-controlled water-concession area monopolizes electricity distribution in the National Capital Region. Even under Epira, all other DU (private DUs and RECs) continued to individually secure franchises, and, thus, ensure that the monopoly of the utilities in their areas is maintained. In addition to rate increases filed to collect costs incurred in the process of distributing electricity, DUs also managed to include in filling for rate hikes the recovery of their income taxes. But why has the country remained stuck in the preindustrial age, while its neighbors, then more impoverished and backward, have progressed economically in this age of science and industry?
The late Harvard-trained economist-lawyer Alejandro Lichauco, in several conversations with this writer two years ago while I was writing my book, A Country Imperiled, had provided the answer: “From the beginning, it was planned in Washington that the Philippines shall remain essentially a rawmaterial economy in order to service the raw-material requirements of an industrial Japan. “In 1946 the Truman administration adopted the recommendation of the Dodds Report, which proposed that Japan be developed as the primary, if not sole, industrial powerhouse in the AsiaPacific region, and that countries like the Philippines should be preserved as raw-material economies, obviously to service the requirements of Japan’s factories. “We owe our knowledge of the Dodds Report to the late Salvador Araneta, who, during his self-exile in Canada during the martial-law years, uncovered the existence of the document and denounced it in his book America’s Double-Cross of the Philippines.” As Araneta bitterly continued: “We do not argue against the wisdom of providing Japan with the means to rehabilitate herself and allowed to become an industrial country once again, although this was contrary to the prior recommendation of a postwar planning committee, headed by Secretary Morgenthau, a recommendation which was in line with the prevailing sentiment at the end of the war. But, certainly, we can argue against a policy that would make Japan the exclusive industrialized country in the Far East, for such a policy was most detrimental to the Philippines. Indeed, the United States could not justify a policy that provided all kinds of stumbling blocks, to the industrialization of her ally [Philippines] in the war against Japan. As a result of this policy, industrialization in the Philippines suffered severe setbacks….” According to Lichauco, the geopolitical plan embodied in the Dodds Report explained what the late Sen. Claro M. Recto described as “America’s anti-industrialization policy for the Philippines. “Conclusive proof of what Recto described as America’s ‘anti-industrialization policy for the Philippines’ came when [President Ferdinand] Marcos formally launched an industrialization program in the late 1970s based on 11 heavy industries, led by the steel, petrochemical and engineering industries. “The announcement of that plan was swiftly followed by protest from the International Monetary Fund and the World Bank, and the proAmerican technocrats in the Marcos Cabinet, led by no less than Cesar Virata, then-prime minister.” Retrospectively, the foregoing examines in details for our readers as to what went wrong in the past and unless, today or in the next couple of years under the new administration, something is done, like drawing up a more informed strategic policy direction, the future economic situation in the country will only get worse. To reach the writer, e-mail cecilio. arillo@gmail.com
Saturday, October 10, 2015
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ore than a thousand Social Services and Development Ministry (SSDM) workers and volunteers gathered at the Cuneta Astrodome in Pasay City to celebrate Caritas Manila’s 62nd anniversary on October 3.
They were recommissioned during the Eucharistic celebration, led by Most Rev. Rolando Tria Tirona, OCD, DD (archbishop of Caceres and chairman of Caritas Filipinas), concelebrated by yours truly and other clergy members from the Archdiocese of Manila. The Grand Commissioning was the culminating activity of Caritas Manila’s 62nd anniversary to pay tribute to its volunteers and servant
leaders. Noli R. Veridico, SSDM archdiocesan chairman, officially opened the program. Two former scholars under the Educational Assistance Program shared their stories and expressed their heartfelt gratitude to Caritas Manila for helping them finish college. The Servant Leadership Award was also given to chosen SSDM volunteers for their invaluable support
to Caritas Manila. A service award was also given to two members of Caritas Manila’s management team for their 10 years of service. Most. Rev. Teodoro Bacani Jr., DD, bishop emeritus of Diocese of Novaliches, gave an inspirational talk to the SSDM workers and volunteers: “Ito pong Caritas Manila ay hindi lamang isang institusyon, kundi ito po ay daluyan ng pagmamahal; hindi lamang pagmamahal ng tao, kundi pagmamahal ng Diyos sa mga tao. At pinadadaloy naman sa pamamagitan ng malasakit ng mga tao sa kanilang kapwa.” In behalf of the board of director, officers and staff, I would like to thank all the volunteers for helping Caritas Manila by sharing their time, talent and treasure. Tunay nga, ang mga volunteers ang yaman ng ating simbahan. Since 1953, Caritas Manila has been the lead social-services agency of the Archdiocese of Manila,
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covering the cities of Manila, Makati, Pasay, Mandaluyong and San Juan. It, likewise, provides assistance for capacity-building and networking for other Metro Manila dioceses, as well as to other dioceses in Luzon, the Visayas and Mindanao. Caritas Manila runs diverse projects that help the poor fulfill their human potential, such as Youth Servant Leadership and Education Program, All is Well Health Program, Restorative Justice Ministry, Caritas Damayan and Segunda Mana. We will continue with our series on Laudato Si next week. To know more about the programs of Caritas Manila, visit www.caritas. org.ph. For donations, call 563-9311. For inquiries, call 563-9308 or 5639298. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www.veritas846.ph. For comments, e-mail veritas846pr@ gmail.com.
My plan to prevent the next crash
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By Hillary Clinton | Bloomberg View
even years after the financial crash, despite important new rules signed into law by President Barack Obama, there are risks in our financial system that could still cause another crisis. Banks have paid billions of dollars in fines, but few executives have been held personally accountable. “Too big to fail” is still too big a problem. Regulators don’t have all the tools and support they need to protect our economy. To prevent irresponsible behavior on Wall Street from ever again devastating Main Street, we need more accountability, tougher rules and stronger enforcement. I have a plan to build on the progress we’ve made under President Obama and do just that.
In the years before the crash, as financial firms piled risk upon risk, regulators in Washington either couldn’t or wouldn’t keep up. Top regulators under President George W. Bush posed for a picture literally taking a chainsaw to banking rules. Before the crisis hit, as a senator from New York, I was alarmed by this gathering storm, and called for addressing the risks of derivatives, cracking down on abusive subprime mortgages and improving financial oversight. Unfortunately, the Bush administration and Republicans in Congress largely ignored calls for reform. The result cost 9 million Americans their jobs, drove 5 million families out of their homes and wiped out more than $13 trillion in household wealth. Thanks to President Obama’s leadership and the determination and sacrifice of the American people, we’ve worked our way out of that ditch and put our economy on sounder footing. Now we have to keep going. First, it’s time for more accountability on Wall Street. Stories of misconduct in the financial industry are shocking—like Hongkong and Shanghai Banking Corp., allowing drug cartels to launder money, or five major banks pleading guilty to felony charges for conspiring to manipulate currency exchange rates. This is criminal behavior, yet, the individuals responsible often get off with limited consequences—or none at all. I want to change that. People who commit serious financial crimes should face serious consequences, including big fines, disbarment from working in the industry and the prospect of imprisonment. As president, I will seek to extend the statute of limitations for major
financial crimes, enhance whistleblower rewards, and increase resources for the Department of Justice and the Securities and Exchange Commission to investigate and prosecute individuals. We should also hold financial executives accountable for egregious misconduct by their subordinates. They need to lose their bonuses and, in some cases, their jobs. Second, I will work with Congress and independent regulators to rein in the complexity and riskiness of major financial institutions. The Dodd-Frank Act that President Obama signed after the crisis has already made important reforms, but there’s more to do. One serious approach being advocated is to pass an updated GlassSteagall Act, separating commercial and investment banking, to reduce the size of the banks and the risk of a taxpayer bailout. I certainly share the goal of never having to bail out the big banks again, but I prefer the path of tackling the most dangerous risks in a different way. To start, I will propose a new fee on risk that would discourage the type of excessive leverage and short-term borrowing that could spark another crisis. We should also strengthen and enforce the Volcker Rule so banks can’t make risky and speculative trading bets with taxpayer-backed money. And if a bank suffers losses that threaten its overall financial health, senior managers should lose some or all of their bonus compensation. That will ensure that financial executives have skin in the game and a real incentive to avoid reckless risk-taking. My plan would also give regulators the authority they need to reorganize, downsize, or even break
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apart any financial institution that is too large and risky to be managed effectively. It is a comprehensive and flexible approach. It allows regulators to adapt to changing markets and help ensure that large financial firms never pose a danger to our entire economy. We’ve learned the hard way that there’s no substitute for tough, empowered regulators with the resources and support to do their job. That’s why I’ve supported Wisconsin Senator Tammy Baldwin’s bill to restore trust in government and slow Wall Street’s revolving door. We need to find the best, most independentminded people for these important regulatory jobs—people who will put consumers and everyday investors ahead of the industries and institutions they’re supposed to oversee. Third, we need a comprehensive strategy to reduce risk everywhere in the financial system. After all, many of the firms at the heart of the crash in 2008, like Lehman Brothers, Bear Stearns and AIG, were not traditional banks. I’ll push for stronger oversight of the “shadow banking” sector, which includes certain activities of hedge funds, investment banks and other nonbank-finance companies. Fourth, we need to ensure that everyday investors and consumers can trust that our financial markets work for them—and not just for insiders with the most sophisticated, specialized and fastest connections. That is why we should impose a tax on the high-frequency trading that makes our markets less stable and less fair. And we should reform the
rules that govern our stock markets to ensure equal access to markets and information, increase transparency, and minimize conflicts of interest. Finally, I will veto any legislation that would weaken Dodd-Frank. We can’t go back to the days when Wall Street could write its own rules. I believe we can defend Dodd-Frank while easing burdens on community banks so they are able to lend responsibly to the hardworking families and small businesses they know and trust. We also have to defeat Republican attempts to gut the Consumer Financial Protection Bureau—an agency dedicated solely to protecting Americans from unfair and deceptive financial practices— and to exploit the upcoming budget and debt-ceiling negotiations for rollbacks in financial reforms. The bottom line is that, we can never allow what happened in 2008 to happen again. Just as important, we have to encourage Wall Street to live up to its proper role in our economy—helping Main Street grow and prosper. With strong rules of the road and smart incentives, the financial industry can help more young families buy that first home, make it possible for entrepreneurs to create new small businesses and support hardworking Americans saving for retirement. My plan will help us unlock that potential. We’ll create good-paying jobs, raise incomes and help families afford a middle-class life, with less speculation and more growth—growth that’s strong, fair and long-term. That’s what I’m fighting for in my campaign, and that’s what I’ll do as president.
Agham Party-list questions constitutionality of CSP
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lyansa ng mga Grupong Haligi ng Agham at Teknolohiya para sa Mamamayan (Agham) Party-list President Angelo B. Palmones recently said that the Department of Energy’s (DOE) Circular 2015-06-0008, pushing for the implementation of the Competitive Selection Process (CSP), is legally questionable. Palmones issued the statement in agreement with the recent pronouncements made by the House Energy Committee during a forum on CSP organized by the University of the Philippines-Center for Integrative
and Development Studies. Palmones said that he is puzzled as to why the circular was issued by former Energy Secretary Carlos Jericho L. Petilla just days before he resigned from his post. Palmones said, “I strongly believe that [the] DOE is encroaching on the Energy Regulatory Commission’s [ERC] jurisdiction by making the regulator subordinate, and by directing it to promulgate implementing guidelines.” He added, “the DOE is compromising the independence of the ERC by directing the ‘joint issuance’ of implementing guidelines, when the
ERC has the sole mandate under RA [Republic Act] 9136 to evaluate power-supply agreements.” Palmones added, “We also agree with the House’s Energy Committee Chairman [Reynaldo] Umali, when he said that there are some constitutional infirmities in this circular. For one, by issuing this circular, the DOE has encroached on the policy-making power of Congress. Policy determination belongs to Congress.” He also said, “Another problem that the CSP may pose is that any losing bidder may likely go to court
to contest the winning bidder. When this happens, it will put on hold the power supply of the cooperative or distributor, which may lead to brownouts.” Palmones reiterated, “The CSP is clearly lacking in legal basis and will only benefit certain generation companies at the expense of the paying consumers. The experience of cooperatives and distributors with regard to CSP all suggest that it is a failure. It is a puzzle, then, why some interested groups and individuals are still pushing for this on a national scale.”