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Federalism revisited

Benjamin R. Punongbayan Benjamin R. Punongbayan

THE advantages of federalism that accrue to federal countries around the world today cannot be denied. To convert unitary Philippines into several states and then federate them, however, will not bring the same results. On the contrary, doing so will set back our political and economic development for decades.

Federalism and our current state of political development do not fit together.

For federalism to work, federal states should be able to govern themselves competently from the start. The reality is that the government of the entire Philippines is still far from reaching the desired level of competence as shown by our successful peers.

The United States and Germany are good examples of a federal system.

The United States came into being by the federation of the original 13 colonies. These colonies had been governing themselves separately from each other for about a century under the reign of the British King. They had their own respective constitutions and government structures. They decided to bind themselves together for a common cause — to cut their ties with Britain. When they did so, each of them retained their right to govern themselves. In fact, it took several years after proclaiming independence before they accepted and adopted the present US Federal Constitution. All that the 13 former colonies did was to create a higher level of government — the federal government — that served to unite them and protect them from external threats.

Germany today is composed of many previously self-governing states that had their respective reigning royalty. These states were separately governing themselves for centuries, and had organized themselves under a loose German confederation before and after Napoleon. In 1871, these states formed a much closer federal union under the leadership of Prussia to project German power.

In both the cases of the United States and Germany, each of the states composing the federal union had long years of experience in governing themselves autonomously before federating. Other federal countries in the world today have also developed in a similar way, because each component part was previously autonomous and wanted to retain its autonomy under the federal union.

Clearly, the federal political system does not apply to unitary Philippines, as the country started and developed differently.

The various Philippine regions do not have any experience at all in governing themselves autonomously. It is naive to assume that, by simply dividing the country under its present state of political and economic development into federal units, the parts and the whole will achieve accelerated development. The two systems, federal and unitary, simply follow separate paths of political development. Converting from one structure to the other is inconceivable. In fact, there is still no unitary country in the world that has converted into federalism. One may try, but it does not make sense.

There are two important reasons converting unitary Philippines into a federal country is insensible. One is the current poor state of the country’s political development. The Philippines is beset by widespread corruption, not only at the national level, but more so at the local level. The governing class is oligarchic; the country continues to be governed by 100 or so families.

There is widespread inefficiency, as evidenced by long-unsolved traffic problems; long delayed infrastructure project execution; poor-performing bureaucracies, including the police; poor public education system; long-delayed justice system; prevailing selfishness of members of Congress; and many more. All these are strong impediments to sustainable economic growth.

If the present national government cannot deal effectively with these poor conditions, how is it possible for the governments of the designated inexperienced federal states to deal with them in a better way?

Would splitting the country into federal states turn government personnel into becoming more skillful and efficient? Would government systems and processes at federal and state levels become more efficient and effective? Would corruption be substantially reduced? Would oligarchy disappear? Would legislators be less selfish? These developments are highly unlikely.

On the contrary, the likelihood is that the overall government function will become worse — the development of the government organizational structures and systems, especially at the state level, will necessarily take a long time and suffer downturns before they become better; qualified personnel will be hard to find and attract at the state level; there will be expanded opportunities for corruption; and above all, each designated state lacks the experience to govern itself autonomously. Do we want proof? Let us examine the performance of those national services that were devolved to the local governments under the present local government code. The results will be indicative of how effective the government of the designated states will be.

The other important reason is the widely uneven economic development of the various Philippine regions. NCR, Region III, and Region IVA generate about 63% of the country’s GDP, while having only 39% of the population.

The fundamental premise of the proposed federalism is for each designated state to drive its own development with the expectation that the poorer regions will achieve accelerated economic growth and be at par with other regions. How can that be achieved under the current widely uneven economic development of the various regions?

Without substantial money transfers, the economic gap between the rich states and poor states will become much wider and, thus, will drive a massive population shift. On the other hand, if substantial money transfers are made, then the fundamental underlying principle of federalism will become irrelevant. Moreover, such money transfers will only make it clear to the rich states the magnitude of the amount of wealth they are forgoing and may try to hold them back and, thus, create serious disputes.

A good case in point about the likelihood of substantial money transfers is a provision in the existing Bangsamoro law proposal. This bill provides for an annual block grant from the central government to Bangsamoro equivalent to 4% of the net internal revenue collections of the BIR less LGU allotments (about P40 to 50 billion of grant based on available 2017 budget information) in addition to expanded local taxes and 25% share of national taxes collected locally. Under federalism, we may have to give similar block grants to several poor states. If so, where will the money come from? What then have we accomplished?

Clearly, maintaining and continuing the present unitary government will provide a much better chance of overcoming the persisting problems that seriously hinder our political and economic development, as opposed to conducting a federalism experiment.

As an alternative to the proposed federalism, maybe we should allow independence to those regions which would like to acquire it, à la Czechoslovakia. These regions will be strictly on their own. However, we should anticipate that there will be winners and losers among the former parts of the Philippines, and such resulting condition may create a geopolitical risk within the former Philippine geography. Nevertheless, I can support that proposal as opposed to federalism, where everyone become losers.


Benjamin R. Punongbayan is practically a retired accountant. He is the founder of Punongbayan & Araullo.


As published in BusinessWorld, dated 30 November 2017