It’s Less About Oligarchy and More About Bureaucratic Crony Capitalism

It is held by some parties that the “web or ecosystem of corruption” in the Philippines stems from the oligarchic structure encompassing the Presidential seat of power. The following opinion is based on the assumption that such claims has merits.

According to wikipedia.org, ``Oligarchy (Greek Ὀλιγαρχία, Oligarkhía) is a form of government where political power effectively rests with a small elite (emphasis mine) segment of society (whether distinguished by wealth, family or military powers).”

Now ADB’s Critical Development Constraints says that ``In 2003, the richest 20% (highlight mine) of the Philippine families received more than half of the national income, while the poorest 20% accounted for only one twentieth.” This means that over 50% of national income rests on some 3.3 million of the 16.48 million families (businessworld).

By definition 3.3 million families controlling the entire economy may partially be true but is not a sufficient condition by which to categorize of an oligarchic political economy. 3.3 million is not a small segment. It may be true to some industries but probably not to all.

Further among the persons allegedly cited as oligarchs benefiting from the present administration only one appears to be a valid “oligarch”. Although as a caveat, the magnate has been a known “oligarch” since the Marcos administration. All the rest seem to be new names which mostly belong to the “old rich” families.

What seems to be a more adequate description under the alleged circumstances in our present political economy is "Crony Capitalism".

From Wikipedia.org, (highlight mine) ``Crony capitalism is a pejorative term describing an allegedly capitalist economy in which success in business depends on close relationships between businessmen and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.”

The common characteristics of a crony capitalist society again from wikipedia.org ``Crony capitalism is generally associated with more virulent government intervention, however. Intentionally ambiguous laws and regulations are common in such systems. Taken strictly, such laws would greatly impede practically all business; in practice, they are only erratically enforced. The specter of having such laws suddenly brought down upon a business provides incentive to stay in the good graces of political officials.”

As Ludwig von Mises always reminds us "corruption is a regular event of interventionism", a complex web of bureaucracy is the ultimate design that allows for such perverted actuations,

From Ludwig von Mises in his Bureaucracy (highlight mine),

``Under this system the government has unlimited power to ruin every enterprise or to lavish favors upon it. The success or failure of every business depends entirely upon the free discretion of those in office. If the businessman does not happen to be a citizen of a powerful foreign nation whose diplomatic and consular agents grant him protection, he is at the mercy of the administration and the ruling party. They can take away all his property and imprison him. On the other hand, they can make him rich.

``The government determines the height of tariffs and freight rates. It grants or denies import and export licenses. Every citizen or resident is bound to sell all his proceeds in foreign exchange to the government at a price fixed by the government. On the other hand, the government is the only seller of foreign exchange; it is free to refuse ad libitum applications for foreign exchange. In Europe where almost every kind of production depends upon the importation of equipment, machinery, raw materials, and half-finished goods from abroad, such a refusal is tantamount to a closing of the factory. The final determination of taxes due is practically left to the unlimited discretion of the authorities. The government can use any pretext for the seizure of any plant or shop. Parliament is a puppet in the hands of the rulers; the courts are packed.

``In such an environment the entrepreneur must resort to two means: diplomacy and bribery. He must use these methods not only with regard to the ruling party, but no less with regard to the outlawed and persecuted opposition groups which one day may seize the reins. It is a dangerous kind of double-dealing; only men devoid of fear and inhibitions can last in this rotten milieu.”

So if this is true then at the end of the day it all boils down to a systematic backfire on our excessive dependence on government. From which special interest groups has taken advantage of the intricate webs of laws to economically profit using its political connections with the center of power.

As we quoted Ron Paul last Sunday, ``The only effective way to address corruption is to change the system itself, by radically down sizing the power of the federal government in the first place. Take away the politicians' power and you take away the very currency of corruption.”