Business World, 19 August 2013


Einstein once remarked that there are only two instances of experienced infinity, namely, the cosmos and the stupidity of man. There is now a third: greed. The PDAF scandal shows that greed knows no bound. PDAF, previously CDF, which was created to give the Executive considerable leverage over Congress in legislative matters, clearly in my non-lawyerly mind violates the spirit, if not the letter of the coequality and independence of the tripartite constitutional bodies. It makes Congress a mere organ of the Executive. How’s the principle of checks and balance to be served?

For the rest, permit this column to detour from the PDAF imbroglio and turn to something less dramatic but just as pressing for our future.

August 22 is Deng Xiaoping’s birthday. Deng engineered Mainland China’s still-unfolding economic miracle which graduated over 500 million from poverty. He is a saint in my book. August 22 should be a Deng Xiaoping Thought Day when lessons from the great man are studied and applied to issues of the day.

One such issue is CARP’s extension, CARPER, which expires in 2013. The debate about whether to re-extend CARP beyond the quarter-century of existence will soon begin. As with many government programs that have outlived their usefulness if they had it at all, the encrustation of many vested interests feeding on its largesse will make it difficult to wind it up. The review of its and its extension’s performance will once more be mixed with abundant pro-forma results (so many hectares acquired, so many collective CLOAs (Certificate of Land Ownership Award) distributed, etc. and a dearth of substantive ones (significantly increased beneficiary farm productivity and income). It can rightly claim,of course, that it has engendered a new social class, the new landed poor. Once more, the old reliable copouts brandished in 2009 will be re-brandished: inadequate funding, poor infrastructure, poor extension work. There is still no reason to disbelieve that its two-million agrarian reform beneficiaries (ARB) would be better off if the hundreds of billions of pesos in spending were turned into a farmer endowment fund whose interest finances a direct conditional cash transfer. And at the same time financing that farm endowment fund with a size-based land tax. That is, of course, water under the bridge. But looking back at the massive transactions and opportunity cost of CARL should serve to instruct us on our future course.

CARP should be accorded a dignified funeral. With it should be interned the five-hectare ownership ceiling and land reform restrictions which killed the formal rural financial market. With it should be buried the proscription of awarded land transfer by sale or usufruct (Section 27) to allow the more productive and entrepreneurial farmers to rise to the top and exploit scale economies. Effort should be redirected to converting collective CLOAs to individual titles. Let the market — rather than PDAF-drunk legislators — determine the optimal sizes of farm holdings in different crops. In other words, after 25 years of chasing equity, it is now time to chase efficiency by unleashing the market.

Unleashing the market is quintessentially Deng Xiaoping. Sent to fix Mao’s massive debacle called “The Great Leap Forward,” he quickly realized that nibbling at the edges won’t do; it had to be gutted from the roots. In lieu of the slogan “It does not matter that the train is late as long as it is socialist,” he embraced the emblematic of the Dengian adage: “It does not matter what color the cat as long as it catches the mice.” The difference between Mao and Deng was massive: Mao held that socialist ends can be attained only with socialist policy instruments; Deng held that socialist ends should be pursued by policy instruments that worked. Deng resisted what we call “policy space compression.” So he let farmers play the market. The problem with playing the market is that some are better at it than others. The former became affluent which was “anti-socialist” in Mao’s book. This earned Deng the epithet “capitalist roader” and he was promptly ran out of power into exile. Meantime, Mao’s socialism managed only “inclusive poverty.” Upon his ascendance following Mao’s death in 1976, he once more unshackled the farm market with his “household responsibility program” which promptly brought immense improvement in farmer incomes. Deng then unleashed the market in other sectors (the “Socialism with Chinese Characteristics”), which produced China’s economic miracle.

How is Deng relevant to CARPER? Over the last 25 years, we have become hooked on the idea that the farmer’s lot cannot be improved without his owning the plot he farms. Any policy package without farmer ownership is a betrayal. Policy space compression in another guise. Well, CARP had 25 years to prove itself wanting. No amount of additional money can improve its performance. Time decompresses the agricultural policy space. Time to give the market a chance.