A constitution for economic freedom

Dindo Manhit, President of the Stratbase ADR Institute for Strategic and International Studies

The development of a dynamic and productive economy hinges on its society’s constitution — the national framework whose provisions help ensure the people’s wellbeing. In concrete terms, the economic provisions of a constitution succeed when they strike the right balance between safeguarding the national patrimony and encouraging the freer flow of opportunities to the people. For this reason, one factor to consider when drafting a constitution is how it helps or hinders the people’s prospects for more employment, better incomes, and better standards of living.

Today, Philippine society finds itself in an opportune situation, where both domestic and international conditions call for a fundamental adjustment. This adjustment must occur at the highest level: amending the law of the land to make it more responsive to the needs of the times. The intertwining movements of regionalization and globalization require us to increase the flexibility of our Constitution’s provisions and discard its most economically rigid ones.

Three decades have passed since the promulgation of the 1987 Freedom Constitution, and today a new charter may be ahead of us. Already, the ruling PDP Laban has submitted its proposed constitutional amendments to Congress. We may be voting in a plebiscite sooner than we think — in the 2019 elections.

Obviously, the law of the land has been outmoded by the interplay of time, place and processes that underline the oft-cited need for more flexibility for our economy. But in addressing this demand, what is needed is not a full overhaul but, rather, a straightforward relaxation of its economic provisions. By relaxing the provisions, we attune them to the changing conditions that govern our society at the subnational, national and supranational levels.

Specifically, the proposed amendment is a simple insertion of the phrase “unless otherwise provided by law” to the economic provisions in Sections 2, 3, 10 and 11 of Article XII (National Patrimony and Economy); Section 4 of Article XIV (Education, Science and Technology, Arts, Culture and Sports); and Section 11 of Article XVI (General Provisions).

The wisdom behind the relaxation of the Constitution’s economic provisions is not unfathomable. It is simple: to make the Philippines more conducive to investments that would in turn translate to more jobs and a higher rate of employment for Filipinos. Employment-led growth benefits not only the working people but also the consumers who would be benefited by better services and products borne by a more competitive environment.

Rent-seeking practices would be curbed, and substandard and oppressive operations offered by many businesses would be phased out. The side effect of instilling an entrepreneurial character to the law of the land will be to upgrade our economic competitiveness by exposing the country’s skilled and unskilled labor to international standards. Overall, the insertion would change the dynamics of economic competition.

The restrictive provisions in the 1987 Constitution have only promoted economic myopia anchored on the protective clauses that have merely benefited oligarchs. It has been a charter confined and defined by political timelines to serve vested interests. Further, it has been a constitution imprisoned by a social stigma. The alternative flexibility will exponentially open up opportunities for both local and national businesses and, at the same time, offer foreign businesses a more dynamic investment environment.

It is time to open our economy and seize opportunities for the benefit of the people at large. But of course, institutional capacity is a necessary condition for any development strategy to succeed. Thus, economic restructuring should be accompanied by a political system—i.e., a federal structure—to provide the institutional backbone of economic freedom.

As Apolinario Mabini would say on effectiveness and timeliness in governance, “[A]ng syensya ng pamahalaan ay di binubuo ng kaalaman na pumili ng pinakamagaling at pinakaperpekto, kundi kung anong pinakamagagamit at napapanahon.”

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