NOTES ON THE
FEDERAL STRUCTURE FOR THE PHILIPPINES*
By Gonzalo M.
Jurado, PhD
Vice-President
for Finance and Development and Professor of Economics
Kalayaan
College
We’ve
heard of the pros and cons of a federal structure of government for
our country from various authorities in the last several years**,
perhaps even taking sides in the debate. My own thoughts on the
matter have been formed from my long association with Dr. Abueva who
as a scholar has long advocated the federal structure of government
for our country. Though I am apprehensive that a federal structure
of government might unleash latent forces of separatism in our
country, I am persuaded that it might just be the structure that will
ensure that decisions and actions taken at higher levels of political
authority, which in our current unitary structure seldom affect
people on the ground, impact positively on the lives of our
countrymen. This should accelerate the development of our economy
and speed up the enhancement of the welfare of the Filipino people.
I am in
general agreement with Dr. Abueva on the points he has raised in his
paper for which reason I shall not anymore comment on them. What I
shall do is to cite three propositions in economics suggesting that a
federal structure of government compared to a unitary one will be
better for our country, more responsive to our individual and common
aspirations.
One. The
federal structure of government will reduce the negative and increase
the positive impact of location on our political subdivisions.
Location theory says that the nearer you are to the center the more
likely you are to benefit from the advantages of the center; the
opposite is also true, the farther you are from the center the more
likely you are to suffer from the disadvantages of distance.
No matter
what we do, we can never obliterate the consequences of distance.
Everything else being equal, it will always take longer to travel
over a longer distance than over a shorter distance. It will always
take longer to come to Manila from Batanes than from Bulacan. It will
always be more costly to deliver a product to distant South Cotabato
than to nearby Cavite. Those closer to the kitchen will receive more
culinary attention and service than those farther from it.
This
explains why Mindanao and the Visayas, both physically distant from
Manila, the center of our current unitary structure of government,
suffer from inadequate infrastructure and poor political, social and
economic services, while provinces neighboring Manila, including
Manila itself, suffer from a surfeit of these facilities and services
-- notwithstanding commitments regularly made by Luzon political
leaders to direct more attention and more resources to Mindanao and
the Visayas or lessen the concentration of resources in Luzon or
Manila.
A federal
structure of government will enable our provinces to maximize their
benefits (or minimize their costs, which is the same thing) from
distance. That is because each federal unit will have its own
capital which, naturally, will be located somewhere in the federal
state. With its own center, the federal unit will have no compelling
reason to defer to the unitary center. Provinces, towns and
communities within the federal unit will now be referring to a center
nearby rather than to any capital situated hundreds of kilometers
away. People from Batanes will not have to come to Manila when they
can settle their problem in Basco. The high transport cost of a
product coming from Luzon to South Cotabato can be avoided if the
product can be sourced from Koronadal. Why bother about distance to
the kitchen when the kitchen has relocated to your immediate
neighborhood?
Two. The
federal structure of government will attract the forces of
agglomeration to the federal units and thus accelerate the federal
units’ development. From agglomeration theory we know that people
and resources tend to concentrate in places where there are already
large concentrations of people and investments. People are attracted
to people; investments attract further investments. The opposite is
also true: people and resources tend to be “repelled” by empty
space.
As matters
currently stand people and investments tend to agglomerate in Manila,
the center of our unitary structure of government. Despite
strenuous demands for decongestion and dispersion frequently voiced
by city officials and urban planners, people from the provinces
gravitate to Manila; businesses large and small come to settle in
Manila. The reason is simple, here is where jobs are located, here
is where incomes and profits are earned.
As the
various federal units work for their development, they will attract
agglomeration forces to themselves. New or refurbished federal
capitals will function as magnets to people and resources in the
federal state. Responding to perceived needs of civil servants in
the various departments of the new federal state and the relocated
departments of the unitary government, businessmen can be expected to
make investments in housing, restaurants, and personal services. In
due time, these investments will draw further investments in hotels,
education and medical facilities. Before long industrial,
commercial, and cultural agglomerations will have risen in the
federal capital and its environs, dynamizing the whole federal state.
And three.
The federal structure will promote friendly competition among the
federal units, accelerating their growth and development. Economics
abhors monopolies for the simple reason that monopolies are
inefficient, selling poor quality products at prohibitive prices, to
the detriment of the interest of the communities they serve. In
contrast, entities operating in competitive markets are constrained
to deliver the “best” products at the most reasonable price to
customers in order to keep their share of the market. The government
in a unitary system is the most glaring example of a monopoly,
unchallenged in its collection of exceedingly high taxes from the
citizens and delivery of unspeakably poor services to them.
The federal
structure of government will give vastly expanded autonomy to federal
units. In the exercise of this autonomy federal units will be
obliged to rely upon themselves. They will have to plan out and
implement the development of their areas of responsibility on the
basis of their own vision and resources.
One virtue
of the federal structure is that it will enable the federal units to
benefit not just from their own genius and resources but also from
developmental stimuli coming from outside. That is because sooner
than later they will find themselves in friendly competition with
their neighbors. Competition will enable them to replicate the
successes and avoid the failures of their neighbors, even as their
neighbors will also benefit from their successes and failures.
This
friendly competition will be a most welcome development. For,
operationally, it can only result in the improvement and expansion of
the economic, social, political, cultural, educational, and other
social overhead, not just of one federal unit but of all of them, to
the benefit of the country as a whole.
These are
economic reasons supportive of the political arguments put forward by
Dr. Abueva, suggesting that the federal structure of government is
superior to the unitary structure in the acceleration of the
development of our economy and the more speedy enhancement of the
welfare of the Filipino people.
*Delivered at 4th Round Table Discussion on Structural Reform: Forms of Regional Decentralization, sponsored by the University of Asia and the Pacific, Ortigas Center, Pasig City, on September 10, 2012, in reaction to “Federal Form of Decentralization” by Jose V. Abueva.
**For a comprehensive discussion of federalism, see, among other sources, the Stanford Encyclopedia of Philosophy, with Internet Link: plato.stanford.edu/entries/federalism/.
