05 May 2007

A case of government failure

My column for this week's issue of Vox Bikol.

THE ONGOING controversy generated by the decision of the First Division of the Commission on Elections (Comelec) disqualifying five-term Naga city mayor Jesse Robredo can be viewed from the prism of economics, especially public choice theory as applied to regulatory capture.

Let us start with the May 1, 2007 open letter by former Senate President Jovito Salonga, one of the country’s few remaining true statesman. The following paragraph is crucial:

The Commission on Elections is supposed to be an independent, impartial and competent Commission, worthy of the people’s trust. But the Chairman of the COMELEC and at least two of his fellow Commissioners are seriously tainted because of their track record and their palpable bias in your favor. In fairness to the others, Commissioners Romeo A. Brawner and Rene V. Sarmiento have earned public trust due to their meritorious performance. Commissioner Nicodemo T. Ferrer’s trust rating is still uncertain.
Now, put this side by side the following definition of regulatory capture, courtesy of the ever-useful Wikipedia:
Regulatory capture is a phenomenon in which a government regulatory agency which is supposed to be acting in the public interest becomes dominated by the vested interests of existing incumbents in the industry it oversees. In public choice theory, regulatory capture arises from the fact that vested interests have a concentrated stake in the outcomes of political decisions, thus ensuring that they will find means -- direct or indirect -- to capture decision makers.
At the very least, Brawner and Ferrer’s decision to effectively overturn six cases decided by the Bureau of Immigration and Deportation, the Comelec itself as well as the Supreme Court in Robredo’s favor raises serious questions as to whether they have been captured as well by the Arroyo administration.

The warning sign that all is not well with this election, according to Robredo, came when his case -- practically a refiling of a 2001 complaint that the Comelec dismissed both at the division and en banc levels -- fell on Brawner and Ferrer’s lap.

Now, both are classmates of incumbent Camarines Sur 2nd district Rep. Luis Villafuerte in the UP College of Law, with Ferrer even a former law partner. For delicadeza, they should have inhibited and let the other disinterested division take on a case where their peer has a particularly strong interest -- being the spurned former political godfather and a long-standing opponent ever since. A PCIJ interview with Robredo explains how it all started.

Regulatory capture is nothing new. Greg McMahon of Whistleblowers Australia, for instance, has documented seven variants of this phenomenon using analogies from the game of rugby and their applications the whole world over. Let us not go far: when allegations were made that the Civil Aeronautics Board (CAB) is in the pocket of Lucio Tan, who owns both Philippine Airlines and Air Philippines, that is a form of regulatory capture.

Public choice theory posits that government agents in the executive, legislative and judicial branches are not altruistic individuals but are rather motivated by personal interests that do not square with that of the public. It explains why legislators, for instance, remain enamored with pork barrel and political dynasties even if their constituents largely abhor these. It offers a jaded and cynical view of government institutions, yes, but it is more square with reality.

Salonga’s letter imply that the present Comelec has been captured by the Arroyo administration. Acting on its best interest, this administration has been using its appointing power to load Comelec with individuals -- the infamous Virgilio Garcillano among them -- who would not act impartially as required by law.

This is a clear case of government failure, the public sector equivalent of market failures whose common denominator is their inability to deliver the basic goods and services that society needs. In our case, credible elections that should renew our democracy as Salonga said, and not undermine it.