Posts Tagged ‘property rights’


Property rights of the poor in the Philippines I.

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Property rights of the poor in the Philippines II: The political economy context.


Philippine population growth, 1961-2003

More recent developments shaped the terrain for the poor’s struggle for property rights in two major ways.  Population growth, increased economic activity, continuing internal warfare, and worsening environmental degradation combined to make the struggle for poor people’s rights a more difficult one.  The need to ensure

Philippine GDP growth, 1960-2009

economic growth in response particularly to population growth and the opportunities offered by globalization (which includes the whole-scale revitalization of the mining and other extractive industries) increases demand for resources and pressure on the property rights of the marginalized.  This increased demand has specifically led to (settler and corporate) encroachments on the land and resources of indigenous peoples.  Environmental degradation effectively decreases the supply of valuable resources, increases the value of ‘untainted’ assets, and intensifies the contest for control over these same assets.  Together with environmental problems, internal warfare has effected a significant movement of poor people from war-torn areas into more ‘peaceful’ jurisdictions and the nation’s urban centers (swelling the urban poor population in the process).   Anecdotal information suggests that the disorder spawned by internal wars have been used by powerful interests to claim ownership over assets in war-torn areas.  In the international arena, the growing need of industrializing China (and possibly India?) for raw material inputs is a special factor in this over-all growth of demand for resources in the country.

Degradation due to mine tailings

On the other side of the balance, the end of authoritarianism in 1986 through a ‘people power revolution’ offered and continues to offer novel opportunities for popular empowerment.  The 1987 Constitution institutionalized

EDSA 1986

popular empowerment as a fundamental state principle.  While at times a shibboleth, the imperative for popular empowerment animates post-authoritarian practice and discourse.  After 1986, the broad anti-dictatorship movement has morphed into a vibrant and more diverse mix of new social movements (including geographically dispersed and grassroots-based environmental movements across the archipelago).  On the policy front, the devolution of central governmental powers and functions to the local governments (through the Local Government Code of 1991) is another important development.  All of these factors combined to widen and enhance the possibilities of ordinary people to have greater control over the lives and their communities, including making their property rights sturdier.


First Certificate of Land Title issued in the Philippines

 

 

 

 

While property rights are exclusive, they are not absolute.  Property rights could be limited in consideration of societal goals and the welfare of the greater numbers in society.  The context within which property rights are recognized, enforced, and protected therefore matters.

 

 

Benguet natives with American colonial soldiers behind them

 

 

The property rights system of the country is a product both of its colonial history and developments over the past few decades.  The Spanish colonial state sought to impose property rights regimes that were alien to those previously instituted by the indigenous peoples of the archipelago, which included stewardship, usufruct, and communal ownership.  In the process, massive asset theft typical of all colonial ventures occurred in the country.  The main object of theft and ownership then was arable land.  The American colonial state introduced the distinction between public and inalienable land and privately-owned and alienable real estate.  In the process, several indigenous peoples in the highlands were disenfranchised of their so-called ancestral domains.  The 1946-1972 post-colonial state continued these Western-originated property regimes even as the asset structure diversified over time.  In general, access to political power guaranteed security of property rights and elites at various levels consolidated their political and economic positions.

Indigenous people in front of the world-famous Banaue rice terraces

 

 

 

 

 

 

 

Up to the eve of the declaration of martial law in September 1972, the property rights of rival elite factions were generally secure regardless of the political cycle’s outcome.  Ownership rights were not extinguished by an electoral loss.  The elites were organized into two political parties that alternated in power at the national level.  The ability of an elite faction to regain power in the next election deterred the faction in power from erasing the property rights of the ‘outs.’  Elite factions, therefore, were prevented by the possibility of electoral defeat from disrespecting the property rights of their rivals.  The default behavior was for the ‘ins’ to plunder the state treasury instead of confiscating the property of the ‘outs.’  Notwithstanding a constitutional provision for two presidential terms, no president has been able to win re-election until 1969 when Ferdinand Marcos won an unprecedented second term.

 

 

 

The seals of the parties–Liberal and Nacionalista–that represent the contending elite factions in the Philippines up to 1972

Ferdinand Marcos declares martial law in 1972

 

 

 

The balance of power between the rival elite factions shifted decisively in favor of his faction after Marcos’ unprecedented re-election in 1969.  He monopolized political power through the declaration of martial law in September 1972 and proceeded to violate the property rights of his political opponents (Kushida 2003).  The demise of the dictatorship in February 1986 saw the post-Marcos elites attempting a restoration of pre-martial arrangements with respect to property rights and access to political power.

EDSA 1986: The placard reads “Surrender! You have lost! Marcos, scram!

 

 

 

The properties of the anti-Marcos elites (such as the Lopez, Lopa, and Jacinto families) were returned to their former owners while a new constitution adopted in 1987 provided the ground rules for political contestation and all but forestalled the possibility of new dictatorships.  After an initial lockout period, even the Marcoses were allowed back into the country and managed to win electoral posts or stand for elections.  Despite the formation of a presidential commission mandated to recover the so-called ill-gotten wealth of the Marcoses and their cronies, these properties got entangled in a quagmire of unresolved lawsuits filed within and without the country.

Eduardo “Danding” Cojuangco Jr.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The violation of elite property rights by Marcos during the dictatorship’s heyday is like a genie let out of the bottle.  Despite all efforts to date, the mess created by the initial massive cancellation of property rights has not been sorted out to everyone’s satisfaction.  The ownership of substantial portions of the equities of major Philippine corporations (including the top-ranked San Miguel Corporation and the Philippine Long Distance Telephone Company) remains contested.  The fall of the dictatorship also led to the recognition of new asset claimants—the thousands of human rights victims who were tortured or murdered by Marcos’ security forces and the coconut farmers disenfranchised by the so-called coconut levy.  The claims of the human rights victims against the Marcos estate had been repeatedly recognized by US courts while the Philippine Supreme Court had repeatedly ruled that the coconut levy was a public fund and must be taken from the control of businessman Eduardo Cojuangco, who used the money to wrest control of the country’s premier business firm—the San Miguel Corporation (SMC).  Recently, however, court decisions favored Conjuangco.

 

 

 

 

The fundamental point to be made with the above digression is the fragility of property rights in the Philippines.  If the properties of elites are not even sacrosanct, could we expect the assets of the non-elites and less-powerful to be more secure?


In two previous blog posts, we examined the seeming irrationality of the urban poor and their tenuous property rights.  The posts were in response to the devastation and human tragedy caused by the torrential rains and rampaging floods earlier this week.

This time, I think it is apropos to share with readers excerpts of a paper written in 2009 regarding the property rights of the poor in the country.  

Filipino farmer plowing the field

A key aspect of poverty would be the weakness or imperfection of the property rights of the poor.  A key argument developed in this blog post states that strengthening these same rights through legal recognition (and all other means) is a sine qua non (even if insufficient) to enable poor people to get out of poverty.   We are primarily interested in finding out how property rights of the poor in the Philippines could be strengthened as a necessary step towards poverty reduction.  To do so, why their property rights are weak or insecure must be understood.  We also seek to identify the most important sources and incentives and the necessary institutions and potential alliances for change.

An agrarian reform beneficiary holding up his certificate of land ownership award (CLOA)

First and foremost, property rights (PRs) are legal categories and the legal nature of PRs must be grasped first.  Properties are things over which a person or group of persons (or some juridical entity) has exclusive rights.  Someone who has property rights is referred to as a right holder; but more commonly, he is referred to as an owner.  Owners of property may be juridical individuals, the state, or a community.  Property therefore is the object of property rights.  A property right is the exclusive authority of the owner (or right holder) to determine how a piece of property is used.  This right is actually a bundle of rights consisting of (a) the right to use the good (usufruct); (b) the right to earn income from the good; and (c) the right to transfer the good to others.[1] 

His problem? Access to roads and safe terminals

Property rights represent the capacity to call upon a society to stand behind the right-holder’s claim to a benefit stream.  They therefore involve a relationship between the right holder and all others, and an institution that supports the claim by requiring others to uphold or respect the right (Bromley 1991).  The last requirement is important; to be effective, property rights need recognition and legitimacy and enforcement structures.  Ideally, it is the state that ultimately enforces and protects property rights of its citizens.  States must be powerful enough to do so.  The state’s power is largely a function of its control over means of violence but asset holders must be convinced that such a power will not be used against them.

Problem? Usufruct rights over side-walks

In reality, however, as Bates, Greif, and Singh (2002) remind us, the state is not the only social agent with assets for violence. Under these circumstances, it is also not the only agency that can protect and enforce property rights and contracts.  Therefore, security of life and property are not intrinsic public goods that only a state can provide.  They can also be private goods since they can be provided by private agents or non-state actors.  Like the state, private actors must have control over some means of violence for them to be able to secure life and property.  Absent the state, private agents will have the monopoly over means of violence and security becomes a pure private good.  When states and non-state actors have access (even if unequal) to means of violence, then they become rival suppliers of security to private actors without such assets.

His problem: Defense of municipal waters

How important are property rights to the poor in society?  Secure property rights provide not only an income stream today, but also incentives to invest in productive technologies and sustainable management of the resources for the future.  The poor are usually those with weakest property rights; and secure rights over land, water, trees, livestock, fish, and genetic resources are fundamental mechanisms for reducing poverty.  Insecure property rights compress the poor’s time horizon (emphasis on the present) and consequently lock them in low-yielding livelihood strategies.  Poverty is also exacerbated by lack of access to public services like potable water and health facilities.  Collective action, or action taken by a group to achieve common interests, can help the poor overcome their limitations and enhance their access to productive assets.  This is true even if the poor and women, as with property rights, are often at a disadvantage with respect to collective action.  The disadvantage is usually a function of social exclusion, lack of time, lack of education and confidence to speak in meetings, and domination by local elites (Di Gregorio et al. 2005).

Problem? Security of land tenure and ownership rights

Current thinking and practice in law and development is dominated by the so-called ‘rule of law’ (ROL) paradigm especially with respect to property rights.  The orthodoxy overlooks a central reality that in many developing countries, laws benefiting the poor exist on paper but not in practice unless the poor or their allies push for the law’s enforcement.  The rule of law (ROL) paradigm focuses too much on law, lawyers, and state institutions, and too little on development, the poor and civil society. It takes a ‘top-down,’ state-centered approach and concentrates on law reform and government institutions.  It remains to be seen whether the dominant ROL paradigm should be the main means for integrating law and development.  An alternative or even complementary approach—legal empowerment or the use of legal services and related development activities to increase disadvantaged populations’ control over their lives—is often preferable (Golub 2003).  The recourse to collective action, the presence of non-state rivals, and the weakness of state institutions in the developing world—all make the legal empowerment mode both necessary and viable.   However, these two paradigms need not unduly compete with each other.  They need to complement each other since rule of law with its requisite institutional arrangements are required for property rights (especially of the poor) to be enforced, protected, and expanded.

References

Bates, R., Grief, A. and Singh, S. (2002). “Organizing Violence.” Journal of Conflict Resolution 46(5): 599-628.

Bromley, D. W.  (1991). Environment and economy: Property rights and public policy. Cambridge, MA.: Blackwell.

Di Gregorio, M., K. Hagedorn, M. Kirk, B. Korf, N. McCarty, and R. Meinzin-Dick. (2005). “A Framework on Institutional Change for Resource Management and Poverty Reduction: The Role of Property Rights and Collective Action.” Paper presented at the 99th seminar of the European Association of Agricultural Economists, Copenhagen, August 24-27, 2005.

Golub, S. (2003). “Beyond the Rule of Law Orthodoxy: The Legal Empowerment Alternative.” Carnegie Endowment for International Peace (CEIP) Working Paper No. 41.


[1] The transfer of rights over a piece of property to another may be total or partial.  For instance, the good may be bequeathed as an inheritance to another by the owner.  In this instance, the full panoply of property rights will get transferred to the heir.  In another instance, only the usufruct rights may be transferred to another without relinquishing ownership.


Dr. Yuko Kasuya

Dr. Yuko Kasuya

 

The single-term limit for the Philippine President in the 1987 Constitution has apparently spawned several unintended consequences. While drafted by the members of the Constitutional Commission as a check on abuse of the chief executive’s power (ala Marcos), the provision had the opposite effects. First, it induces efforts on the part of incumbents to propose self-serving charter-change proposals. Second, it stimulates faster-paced rent-seeking and plunder of state resources. And third (as pointed out by the Japanese political scientist Yuko Kasuya), it weakens an already-fragile political party system. Since the incumbent president can no longer stand for re-election, she cannot maintain party discipline in the next electoral cycle. Disgruntled members can form new parties should they fail to win the incumbent party’s endorsement for their presidential bids.

To date, GMA has been president for nine years, second only to Marcos in length of ‘service’. Not a few are fully convinced that she will step down from power in June 2010, if only because she and her ruling faction both fear prosecution for their misdeeds and abhor the loss of perks of power. If her strategists continue and succeed in their machinations to maintain her on top through whatever formula, then the country will be in for a new round of great political instability.

Elite factions now currently out of power or not entirely close to the Palace’s occupant will not countenance a continuing post-June 2010 GMA leadership. The GMA faction has amassed so much wealth and powers that it is feared to be able to rule indefinitely. Consequently, out-of-power and out-of-favor elites will be expected to use any political means to frustrate the GMA faction’s plans. We will not expect them to confine themselves to constitutionally-sanctioned strategies.

The restoration of democratic processes in February 1986 was read by all elite factions as a return to the pre-martial law modality (that prevailed from 1946 to 1972) that electoral defeat did not threaten already existing elite property rights. The single-term limit was a new rule that accords to the incumbents the right to capture all the rents during their stint in power.

Combined with the above-mentioned unintended consequences of the single-term limit, the greater integration of the Philippines into the global economy made larger and larger rents available to incumbents than ever before. Such riches have enabled them to consolidate their positions and emboldened them to find ways to perpetuate themselves in power.

As I reflect on this question, I am reminded of the insights of realist international relations (IR) theory regarding the prospects of cooperation between sovereign nation-states in an anarchic (meaning the absence of over-arching authority above the states) global environment. Realists are supposedly not optimistic that states will cooperate with each other even if such cooperation will result in mutual benefits due to a concern with relative gain. Such states ask not “who gains?” but “who gains more and at whose expense?” The states in a realist world are afraid that cooperation with others will allow the latter to gain more and be more powerful in the future.

Given the relative weaknesses of the Philippine state, one can construe our elite factions as sovereign nation-states similarly unwilling to ‘cooperate’ with each other. During Tita Cory’s term, rents were supposedly monopolized by Kamag-anak, Inc. Such monopolization was tolerated to the extent that Cory did not attempt to stay in power after June 1992. FVR tried to tinker with presidential term limits but was rebuffed by all other elite factions (including Tita Cory’s). Erap’s faction was unable to drink its full fill. GMA’s nine-year rule is unprecedented but more than that is unacceptable.


For our elites, the key decision is to what extent greed can be moderated so property rights (even over plundered assets) by outgoing factions will be respected by incoming ones.


I know, I know, I know. This blog should have been written and posted four days ago. And I should be blogging on more recent events. But I need to get this particular blog done and ‘out of the way’.

The obvious high point of the fantastic week was Tita Cory’s death, wake, and funeral. I believe I wrote the blog on property rights before my wife Rosalie and I tried to line up at the La Salle Greenhills gymnasium to view her remains. We failed to do so. Monday was the transfer of her remains to the Manila Cathedral. I wanted to join the march but also wanted to attend the second lecture of John Nye at the UP School of Economics. Since I cannot be in two places at the same time, I had to be content with monitoring the march through radio, TV and text messages.

I had classes Tuesday so I couldn’t go the Cathedral. Rosalie couldn’t wait for me so she went with my niece and her friend. They were able to see Tita Cory’s remains at about 4:30am Wednesday morning after lining up for about five hours. While in the queue, those who were filing out of the church warned them that the viewing might be stopped at 4:00 am but could not give any reason why this would be so. They still decided to stay on the line. Soon after, they will learn that the public viewing was temporarily stopped to accommodate GMA.

Wednesday was the internment of her remains so I had to make my move. I drove over to Laloma, left my car at my-in-laws’ place (where Rosalie was monitoring the proceedings at the Cathedral on ABS-CBN), and proceeded to install myself among so many in front of the Manila Hotel at about 10:00 am. I got to see Tita Cory’s remains around 1:00 pm together with the by-now famous honor guard. Noynoy spoke for a few minutes while Mayor Lim and his men tried to instill some order amidst the predominantly celebratory (as in fiesta) atmosphere. The crowd started following the flat-bed truck carrying her remains and I decided to join them. I didn’t know at the time how far I can walk since the last time I joined a march was in 1987—another funeral march for the student leader Lean Alejandro—22 years ago.

The crowd’s energy, together with the wailing of countless fire trucks’ sirens and a huge ocean-going ship’s horn, invigorated me and everybody else to march on. However, the spirit may be willing but the body was not quite up to it. I joined the march from Manila Hotel through Quirino Avenue up to Taft Avenue. My umbrella was broken by the strong winds and my shirt was wet from sweat, rain, and sea spray. I had a meal at about 3 pm at a nearby fast-food joint and proceeded by jeepney back to Laloma where we watched the solemn burial of Tita Cory amidst full military honors.

If the week started and was highlighted by a death and burial of Tita Cory, it ended with another death, this time of a less famous person but still a beloved one. In the afternoon of August, I started receiving a stream of text messages announcing the death of my fraternity brod and comrade Arnel (aka Batman) de Guzman. Arnel is a fascinating character and a compleat human being, obviously not without faults but a beautiful person just the same. He was activist, professor, consultant, writer, and fraternal brother all rolled into one. His activism was broad ranged: from human rights to migrant worker concerns.  Remembering his impishly mischievous grin, we who he left behind chose to celebrate his full life instead of just grieving.  Just like what we did with Tita Cory’s demise.

In between these deaths are the two world class lectures of John Nye of the George Mason University and currently visiting professor at the UP School of Economics. John was supposed to deliver three lectures; the first one was done on July 20 and the second was supposed to have been delivered on July 27. However, John got sick allegedly due to dust in the UP Main Library and the July 27 lecture was delivered on August 3—the day Tita Cory’s remains were transferred to the Manila Cathedral. The third lecture was done on August 7, a day before Arnel’s death.

John’s lectures were on ‘the new institutional economics’ (NIE). I had been reading on the literature ever since I got hooked on the work of Douglass North (on economic performance and time) while on a fellowship in Finland in 1997. However, I cannot claim expertise on the subject. John’s lecture (especially the first and second) gave an extremely useful overview of NIE, which included his own work. John worked with North at the Washington University at St. Louis, Missouri for some 20 years before he transferred to George Mason.

His third lecture was actually a presentation of two new papers. One resurrects the debate between the monetarists and the Keynesians regarding the relative efficacy of monetary easing over fiscal spending to stimulate growth and get economies out of crisis. While arguing for the monetarist case, John criticized the Obama administration’s avowedly Keynesian economic stimulus program for not being Keynesian enough.

His other paper is an exercise in what he calls ‘freak-economics’: an examination of the so-called dragon effect. In the Chinese lunar calendar, the dragon is considered the luckiest animal. Surveying demographic data, John noticed a demographic spike in several countries that adhere to the lunar calendar (Taiwan, Vietnam, South Korea, and Singapore) during the dragon years of 1976, 1988 and 2000. For these countries, birth rates were going down but upticks were observed during the dragon years. Which means that couples, or at the most, mothers, were purposely ‘timing’ pregnancies so their babies will be dragon babies? In John’s book, that means a lot of sacrifice.

Now he wants to know if the sacrifice was worth it. Wouldn’t it be counter-productive to have your baby born in a dragon year? More babies will be born in the same year and they will all be competing for resources, the most important of which would be the best schools. Without boring you with methodological details, John compared Asian and non-Asian immigrants in the United States (those who believed in the dragon effect and those who didn’t). With respect to the 1976 cohort, he found that dragon children had on average had a year’s edge in college education over non-dragon children on top of the fact that Asians were better educated than non-Asians (mostly Latinos).

John fielded questions about the mother effect since he also found that mothers of dragon children were generally older, better educated and richer than non-Asian mothers of children born in the same dragon year. In a typical economist fashion, he said that the best way to eliminate the mother effect is to study at least two siblings—a dragon and a non-dragon and compare their relative performance say in school. John said a study in Vietnam did just that and came up with similar findings. In the end, John jokingly said he will be gainfully employed in the years to come even if he concentrates only on studying the dragon effect.

All in all, the week that was is one of the most memorable and productive weeks I have gone through so far. And I have only begun to scratch the surface. I will soon blog on the visit of the Marcos children at Tita Cory’s wake and relate it to property rights squabbles of Philippine elites. In that blog, I will use the insights of neorealist international relations (IR) theory to help shed light on the possible resolution of such contests.