The hand of the government, April 10, 1948

THE HAND OF THE GOVERNMENT
April 10, 1948

By Teodoro M. Locsin
Staff Member

HOW far should the government go into business? It depends, of course, on the kind of government. If the government is socialist, it should go into business up to its neck. That is what socialism means. Production for consumption instead of private profit. But if the government is that of capitalist democracy, then the government should stay out of business as much as possible. It should leave business in private hands.

Two opposing theories of government divided the leaders of the new American republic. There were the “Maximarchists,��? who wanted to increase the powers and functions of the government, and the “Minimarchists,��? who regarded government as at best a necessary evil, in theory a servant, in practice usually a despot. Alexander Hamilton, spokesman of the “Maximarchists,��? called for a powerful centralized government, distrusted the common people, whom he called, if memory serves, “a great beast.��? He denied them the right or ability to govern themselves, “regarded democracy as the dream of demagogues or visionaries.��?

Thomas Jefferson, author of the Declaration of Independence and third president of the United States, fought Hamilton, calledfor less government and more individual freedom, was twice elected presidency, opposed as dangerous his party’s plan to nominate him for a third term. He was a democrat, pure and simple. He saw the government as a wise man of China saw it: a tiger that must be tamed.

The issue of more government or less did not die when Aaron Burr shot Hamilton dead in a duel. England is trying more government, Russia has total government, while the United States, during the New Deal, went in for enterprises usually left to private initiative. The United States was faced with the problem of over-production, of a market glutted with surplus goods that could not be sold. Those goods had somehow to be disposed of, if the wheels of industry were once more to turn and unemployment to end. So, the government, since capital could not do it, went out and put people to work—or not to work, as the critics charged. The purpose was to create jobs, increase purchasing power, get rid of the surplus produce and open the doors of factories again.

The Philippines is not socialist, heaven knows, and it is certainly not communist, at the same time it is far from faced with the problem of over-production, of having more than can be sold. Of its present condition it may be said that the Philippines has not enough of anything—unless it be politicians. Yet the government is in business—and in business, apparently, to stay.

“The finger of the government is—in every pie,��? complains a businessman. “It is difficult these days to go into any enterprise unless you are in the good graces of the government. You have to play ball with the politicians—or go broke.��?

An exaggeration, we daresay, but not without some truth in it. The list of government corporations is impressive. The government does seem to be in everything. It is in the transportation business (Manila Railroad Co.), in the hotel business (Manila Hotel), in the shipping business (Shipping Administration), in banking (Philippine National Bank, Rehabilitation Finance Corporation), in real estate (National Land Settlement Administration, People’s Homesite and Housing Corporation, Rural Progress Administration), in abaca (National Abaca and Other Fibers Corporation), in coconut (National Coconut Corporation), in cement (Cebu Portland Cement Co.), in sugar (Insular Sugar Refining Corporation, Binalbagan Sugar Central), in tobacco (National Tobacco Corporation). It has the Metropolitan Water District, the National Power Corporation, the Surplus Property Commission, the Government Service Insurance System, and it is in the wholesale and retail trade via the PRATRA and the National Cooperatives and Small Business Corporations. It is even in gambling—the Philippine Charity Sweepstakes Office.

Some of these government enterprises can be justified: Manila Railroad, Government Service Insurance, Metropolitan Water District, etc. All are being justified—on one ground or another. The usual excuse is that the government entered into these enterprises because of the timidity of private capital. It went in to pioneer and pave the way for private investment and initiative. All very nice—but the government has not gone out yet. When will it go out?

Today the Government Enterprises Council is considering the creation of a great holding company to coordinate the activities of the various government corporations. Meanwhile government planned to enter into the lumber industry, only to retreat—this must be said in its favor—in the face of objections by private lumbermen. In this connection private capital was reassured by President Roxas that it need not fear government competition—because government businesses are always more costly to operate, their costs of production are always higher.

A revealing admission of government inefficiency—and graft? In each government corporation or enterprise the government must maintain what one official termed “internal check.��?

“What’s that?��? we asked.

“Well, in a private business, as you know, the businessman tries his best to make money, if he cheats, he only cheats himself, if he loafs, his business suffers and he sustains the loss. That is not true of the government corporation. We must maintain the internal check I have mentioned: an auditor, etc., to see to it that the business is being run properly, that nobody…��?

“Is trying to run away with the government’s money, is that it?��? we said.

“Well, if you put it that way.��?

And of course a government business is not run the way a private one is, he admitted. In a private business, inefficiency is punished by ruin, so the employee who idles and loafs is canned. The manager must know his business—or else. It is not so in a government corporation.

In a government corporation, appointment to the most responsible position is dictated first by politics, secondly and incidentally by qualifications. A government corporation is the natural home of lame-ducks. The dumber you are, the better. Independent thought is subversive, imaginative planning is the quality of a man who can think for himself—a dangerous man, one to get quickly rid of. The dumber you are, the better. You may yet be the president of a bank—a government bank.

A government corporation needs, like any other business, competent employees and skilled hands. It must employ lazy and useless ones. It must accommodate as many as possible of the boys who brought the party in power a fair number of votes. Its aim, at least in practice, is not to produce but to provide the boys with a place in which to read their morning papers. What does it care about profits and losses? The losses can always be passed on to the people. The politician does not go broke, the people are the ones who hold the bag.

The Metran was an awful loss, the Nacoco has taken a terrific financial beating under the otherwise competent hands of Maximo Kalaw, PRATRA burned badly-needed milk, and it would be interesting to put the NBI really to work to dig into and make an over-all report on the Surplus Commission. The National Cooperatives and Small Business Corporation lost a lot of money last year, the National Tobacco Corporation is in a pretty bad fix, NARIC did not exactly make a name for efficient administration, and the Philippine National Bank will be lucky if it got back half, or even a fourth, of its crop loans, whose exact amount it is afraid to tell the people for the people might die of shock.

And nobody gets fired.

A government spokesman justifies the existence of these government corporations. You will find the “reason��? for their existence in the charters of the respective corporations. Persuasively set forth. The fact remains that the government is in business, and we have a presidential secretary (Emilio Abello) chairman of the board of directors of a hotel, the secretary of labor (Pedro Magsalin) as chairman of the board of governors of cooperatives, the secretary of justice as chairman of the board of directors of a bank, a secretary of education (Manuel Gallego) as chairman of an agricultural settlement, a budget commissioner (Pio Pedrosa) as president of a railroad company, a carnival man (Arsenio Luz) as administrator of public property valued in tens of millions, and others we can enumerate ad nauseam.

Over them all presides the Honorable Placido Mapa, vice-chairman of the Government Enterprises Council, and over him sits His Excellency, Manuel Roxas, President of the Philippines, ruling a business and industrial empire that may yet, in the possible future, rival Ford’s or Rockefeller’s.

Such powers as these few men wield must shake a democratic heart. Power, no matter held by whom, corrupts, we know, and the philosophy of democratic government is to withhold as much power as possible from the few lest they oppress the many. In a supposedly democratic Philippines, however, the philosophy of government seems to run the other way. One recalls the cry of the Bolsheviks: “All powers to the Soviet!��?

The Philippines, we have said, is not socialist, it is not communist, nor is it a mature capitalist society like the United States, harassed by the problem of over-production. What then is the Philippines? What kind of a government will it have if present tendencies are unchecked? We do not like the word, but there seems no way of evading it: fascist.