Pork Barrel 7: Presentation at Adamson University

This afternoon, I spoke at Adamson University on a big college conference, held at the university's theater, probably about 200-300 students in the audience. I am thankful to Ms. Pauline Brillantes, a young faculty member at the Department of Social Sciences, for inviting me to their big college event.

Since the audience are university students, I could introduce some basic conceptual framework and they would be able to follow. My presentation was 21 slides long, showing 16 of them here. The full presentation is at slideshare, here.

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See also:

Pork Barrel 4: Ten Q&A on the Pork Scandal, August 18, 2013

Pork Barrel 5: Abolish Pork Fund, or Shrink Government?, August 21, 2013 

Fat Free Econ 46: On Pork Barrel Aboition, August 25, 2013 

Pork Barrel 6: Spontaneity and Friedrich Hayek, August 29, 2013

Pork Barrel 5: Abolish Pork Fund, or Shrink Government?

The other day, a friend way back from UP Diliman undergrad in the 80s, JB Baylon, posted this in his facebook wall and tagged me, below. I am attaching some posters circulating in facebook for the Citizens' indignation rally on Monday, August 26.

PENNY-WISE, POUND FOOLISH??? THE ULTIMATE PURPOSE

…I think it is important to highlight the fact that the PORK we wish to save from the clutches of the porkish is only 1% of our total national budget. This is not to say that it is not worth "saving" even just 1% from ending up in pockets and not in real projects. But it highlights that there is a bigger issue here which should show us to the ultimate purpose of our "agitation". You see we could be focused on the 1% and all het up about it -- but what about the 99%? Who's watching that?

In the Western world they have this saying, "Penny wise, pound foolish".

You see, in my view, the objective should NOT be to remove pork, to do away with it, because that will NOT solve the fundamental problem or address the fundamental weakness. The objective should be to INCREASE TRANSPARENCY IN AS MUCH OF WHAT GOVERNMENT DOES as is possible -- which means we focus as much on the 99% as we are now so agitated over the 1%!!!!

That's where my argument about the need for the FOI bill comes in.

This is why I keep saying, we cannot fall back on our usual habit of knee jerk reactions to issues. We will end up focusing on the 1% and leaving unattended the 99%. Penny wise, pound foolish.

The real issue, folks, is TRANSPARENCY.

… Now, will it take too long to populate the database? of course not. Everytime an NGO CSO or whatever entity applies for a pork grant it should enter its info into the website -- so long before the COA can finish an audit most of the info should be there, for the public to see and the media to verify! Early on we will know if Senator Pork is lining his pockets or Congressman Swine is filling his sty. And then it is up to us to act.

To repeat: I am worried that our focus on pork and its abolition misses the bigger issue: TRANSPARENCY. Eliminate the pork but do not institute transparency and you have a problem with the 99% of the budget. Insist on the institution of TRANSPARENCY -- easier to do in this day and age of Information Technology -- and you strengthen the power of the citizenry -- the Bosses -- over any public servant who may wish to pull a fast one. That would still happen, for sure -- but at a scale far less than the one we are discovering as we sift through the sty.

I thanked JB for his ideas and commented that more than transparency, government size -- the bureaucracy, regulation and prohibition powers, the budget, should shrink, or at least should stop expanding fast. 

http://funwithgovernment.blogspot.com/2013/08/pork-barrel-4-ten-q-on-pork-scandal.html

I support Malou Tiquia's proposal that the 2013 budget (P2 trillion) be re-enacted, throw away the 2014 proposed budget (nearly P2.3 trillion). For those in automatic appropriation like IRA, a supplemental budget can be passed. Interest payment this year is P333 billion, will rise to P352 billion next year. Government just keeps the spend-spend-spend, borrow-tax-borrow policy irresponsibly, spanning all administrations from Marcos up to the present.

A mutual friend, Steve Cutler, replied that “the phrase "moderate your greed" comes to mind for citizens and residents, too. For the government to shrink we as the people must stop asking for so much from the government. It seems like every time something happens, we turn to the government and demand action. We fall on hard times, and we want the government to give us a helping hand. Most often, that is cash, but other times it is some kind of service. Turning more to our own resources, and paying for services we want on an as needed basis, which is the model for a toll road, seems to be what you're suggesting.”

Yes, Steve is correct. Many people asking for the abolition of pork barrel are unaware that they are pointing some fingers on themselves. You want more condoms for the poor? Buy some of it and give to the poor, do not ask for more budget (and more taxes and fees to finance it) even for simple and ordinary procurement. Government should focus, even expand, on its 3 core functions:

The main function of government, its raison d’etre, is to protect the citizens’ right to life (against aggressors), right to private property (against thieves and saboteurs) and right to liberty and freedom of expression (against bullies). All other government functions are either secondary or unnecessary. This is where shrinkage of government bureaucracies and spending should occur. Where there is less money to steal, less stealing will happen.

Pork Barrel 4: Ten Q&A on the Pork Scandal

A friend from the foreign media asked me some questions about the current pork barrel scandal. This is an expanded version (more Qs, more As) of what I sent to him. The posters, I just added here as I support their calls.

1. How is pork barrel made? What is the process to get the money?

--> Legislators, Congressmen and Senators, identify priority projects for their district (District Congressmen) or anywhere in the country (Party List Congressmen, Senators) and the implementing agencies in the Executive branch. Such project identification and funding is incorporated in the annual budget bill that become a budget law called the General Appropriations Act (GAA). So in theory, the legislators do not even touch the money as it goes from DBM (releases the money as stipulated in the GAA) to the specific agencies (receive the money, implement the identified projects). 

2. Where does the money come from? How much money is involved annually?

--> From the budget, via the GAA, funded from various sources: (a) taxes, (b) regulatory fees, (c) privatization proceeds (if any), and (d) borrowings. Congress appropriates the money, how much will go to what agency. DBM releases the money to the implementing agencies (DPWH, DepEd, DOH, DSWD, etc.). What for, as usual to "fight poverty" (even if some poverty is government- or self-inflicted) and other forms of bleeding heart goals.

On average, P70M/year for each Congressman/woman, both District and Party List, and P200M/year for each Senator. But those in the opposition would often get less while those in the administration tend to get more. That’s around P27 billion a year total for both the House of Representatives and the Senate.

3. Who are supposed to check and monitor project implementation or non-implementation?

à The Commission on Audit (COA) and the various Congressional Oversight Committees plus Appropriations hearing. COA is created by the Constitution, not by legislation and its main function is to audit all government agencies to make sure they follow the rules stipulated in spending laws. If any agency violates, COA audit reports are basis for any corruption charges to be filed against the Ombudsman or the regular courts.

4. How is corruption and possible robbery committed, say in the current pork barrel scandal?

--> The corrupt legislators would instruct the DBM and the implementing agencies to give the money to an NGO or private firm as sub-contractor for project implementation, like the JLN Corporation. As one supposedly insider of the JLN firm said, Ms. Napoles would give 70 percent of the entire amount for non-existent projects to the legislators. Napoles would get the balance, about 30 percent and give the “for the boys” share to various agencies that are partners in crime – implementing agencies, LGUs if any, and COA if any. Some reports said Ms. Napoles and team would only get 15 percent net, meaning “for the boys” would get the other 15 percent.

5. How did the scandal come to light? Should we assume that the misallocation of funds is much broader than the politicians currently in the hot seat?

--> From what I read, there was a fight within the JLN camp. Ms. Napoles detained one of her staff, the penalized talked, the story was picked up by media as the leads and info were juicy and some paper trails were shown, then it exploded. 

Yes, the scam is much broader than the existing P10 billion Napoles scandal, total for many years. Meaning there are other operators and fixers whose names and identities are still not divulged as there are no internal whistle blowers yet. Many legislators have their own share of sin and corruption in this pork barrel issue.

6.  What can be done about it?

--> The prevailing mood among the articulate groups in the public is to call for the abolition of pork barrel of legislators so that they can concentrate on legislation and fiscalizing the Executive branch. Other groups justify pork barrel as they themselves benefited from it in the past, meaning the money was not stolen. They just want more transparency how much were spent for whom and on what projects.

7. Can pork barrel be abolished?

à No. If pork barrel was not invented yesterday, then it will be invented today. And if current pork barrel is abolished today, they will invent a new scheme tomorrow. Why?

Total budget of P2 trillion this year and nearly P2.3 trillion next year, legislators will deliberate on such a huge money, approve or reduce the budget of some agencies, and they will have zero "share" from such huge money? That is impossible.

The Office of the President (OP) has the  biggest pork barrel of all. Only about half of the nearly P2.3 trillion budget next year is under new appropriations, the other half is under programmed and automatic appropriations, like interest payment for the public debt, internal revenue allotment (IRA) for LGUs, special funds for government corporations, hospitals, universities, etc. While the former can be scrutinized by Congress if they wish to, the latter is hardly scrutinized. The OP and DBM have great leeway how to allocate and spend such money.

8. Can legislators pork barrel then be considered as compromise by the Executive branch so its budget request will be approved without much debate and questions?

à Yes. Both the Executive and Legislative branches are happy as they both get their own shares of pork barrel. Whether they will use the money productively or waste/steal it is another question.

9. Can an American-style system where a representative can only allocate money to a project in his district through specific provisions in a budget bill that is then voted on by the full Congress, be adopted? 

--> Yes, that is how it should be done here, at least in theory. The difference would surface in (a) how it is implemented (if implementing agencies and/or LGUs are more corrupt), (b) how it is monitored and audited (if COA people are corrupt) and (c) giving government money to “non-government” organizations (NGOs).

It is hard to single out people and certain legislators as it is a dance not only by two people but by three, four or more players.

10. If pork barrel cannot be eradicated as it will simply be reinvented, what are the other alternatives to reduce if not control corruption in government?

à Our bias in Minimal Government Thinkers, Inc. is to limit government size, the bureaucracies and their regulatory and taxing powers. Or at least control further expansion of government. The main function of government, its raison d’etre or reason for existence, is to protect the citizens’ right to life (against aggressors), right to private property (against thieves) and right to liberty and freedom of expression (against bullies). All other government functions are either secondary or unnecessary. This is where shrinkage of government bureaucracies and spending should occur. Where there is less money to steal, less stealing will happen. 

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See also: 

Welfarism 15: Abolishing Pork Barrel, February 04, 2012
Pork Barrel: The Janet Napoles - Legislators' Scam, August 04, 2013 
Pork Barrel 2: Napoles, Legislature and Executive Branches Corruption, August 05, 2013 
Pork Barrel 3: The Silent Idealists, the GFO-NGOs, August 10, 2013

Pork Barrel 2: Napoles, Legislature and Executive Branches Corruption

The Napoles-Some Legislators’ pork barrel scandal continues for several weeks now. And I started reading only a few days ago. I saw that there are too many articles written already. Here are some headlines, from the Inquirer. 

After the Inquirer, Rappler seems to be second in devoting lots of papers and analysis about the issue.

For now, I just want to comment on what my former boss in “Public Forum”, IBC Channel 13’s public affairs program from 1987-90, also my former undergrad teacher, Prof. Randy David, wrote last week. In his column A Thesis on Corruption at the Inquirer last July 31, 2013, Randy wrote:

Even if only half of the allegations against her turn out to be true, Janet Lim-Napoles, the supposed brain behind the mind-boggling pork barrel scam that is the subject of ongoing Inquirer reports, would easily qualify as the country’s foremost expert on corruption. The elaborate scheme attributed to her presumes an intimate grasp of the workings of the political system that no Filipino scholar has ever fully documented....  

Should she ever land in prison and need a benign intellectual pursuit to keep her active mind at work, I would recommend that she consider writing a participant-observer account of the social system of corruption. I would be happy to offer advice on the theoretical framework. A working title for her thesis might be: “Politics and the function of corruption: How the pork barrel works.” The aim of the study would be to bring out the background assumptions implicit in the way the JLN group of companies navigated the murky waters of government. Such research would help transitional societies like ours find effective antidotes to the scourge of corruption in public service.  

I would begin with the hypothesis that the pork barrel, which goes by the pretentious name Priority Development Assistance Fund (PDAF), is really nothing more than a bribe to the legislators who hold the power to approve the national budget. This concession can take many forms and go by other names like “congressional initiatives.” But the basic idea is the same: to provide congressmen and senators the means to cater to the specific needs of their constituencies, and, if they wish, to recoup part of what they spend during elections….  

The main argument of this imaginary thesis would be that a political system like ours incorporates corruption into its operations as a condition for its maintenance. In short, corruption is functional to the system. The system’s default is to reproduce itself. Nothing will compel it to change except persistent pressure from outside the system. If the other institutional systems—the mass media, the Church, the economic system, the law, etc.—can generate enough noise and irritation over its performance, the political system will have no choice but to pause, reflect and reform."

Here are my comments to some of Randy's points.

(1) “the pork barrel… is really nothing more than a bribe to the legislators who hold the power to approve the national budget.”

I Agree. Pork barrel is icing on the cake. A bribe by the executive branch to the legislative branch so that the former can continue many of its wasteful spending, its high and multiple taxation, and its endless and irresponsible public borrowings. This applies not only to the current but to all the past administrations, from Marcos to Cory, Ramos, Estrada and Arroyo. If legislators are not bribed with pork barrel, they will invent new schemes anyway.  They are deliberating, allocating and approving trillion plus budget annually, became P2 trillion this year, and nearly P2.3 trillion next year, national government alone – excluding funding and collections by LGUs, government corporations and finance institutions like SSS, PhilHealth, PagIBIG, PAGCOR, PCSO, DBP, Land Bank, MWSS, MRT, NFA, Napocor, and a hundred plus more -- and they have zero share from their efforts? That is like asking the legislators to become angels and be poor by choice and hence, is impossible to happen.

(2) “a political system like ours incorporates corruption into its operations as a condition for its maintenance. In short, corruption is functional to the system.”

Again, I agree. The budget keeps rising yearly despite wastes and corruption in past budget that are under investigation and/or unaccounted for, means that the scheme has its own life, its own momentum. But while people refer only to corruption by the legislators and those in Malacanang, the LGUs, and the appointed bureaucrats especially in notorious agencies like BIR, BOC, DPWH, DOTC, LTO, DILG, PNP, DND, AFP, DepEd, etc., what is rather hidden is corruption by the public themselves. The  voters, the welfare seekers and dependents, the academics and consultants, the private sector suppliers, the NGOs and media, the multilaterals and foreign aid. Meaning to a certain extent, you and I, we are somewhat part of the corruption in government without our realizing it. How?

Let us go to Randy’s concluding sentence.

(3) “If the other institutional systems...can generate enough noise and irritation over its performance, the political system will have no choice but to pause, reflect and reform.”

This, I think, is partly incorrect. Corruption happens not only in the wastes or robbery of legislators' pork barrel. There is also corruption in non-pork barrel spending, like spending in agencies and sectors where the target benefits or results are absent or not clear.

Take education for the poor, healthcare for the poor, housing for the poor, AR-tractors-credit for the poor, rice subsidy for the poor, etc. Made since many decades ago. If any or all of these programs were successful and done with minimal wastes and corruption, poverty should  have been low at this time. There would be no need for cash transfer for the poor, condoms and pills for the poor.

Just one generation of useful and efficient public education, say in the 60s, would have already produced productive and skilled parents, and their kids would no longer be poor and need another round of education and books for the poor, healthcare and hospital for the poor... for many generations.

In short, many policies and the way they were designed were wasteful and corrupt in the first place. When those programs for the poor were designed in the 60s for instance, they were meant to be perpetual, forever and no time table subsidy programs, and poverty persists until today. And current welfare and subsidy programs, still forever and no time table, are expected to produce the same degree of poverty by 2050 and beyond.

Corruption in policies makes corruption in implementation and legislation easier to commit, with or without pork barrel.

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See also: 
Welfarism 15: Abolishing Pork Barrel, February 04, 2012 
Pol. Ideology 43: On BIG Government Fetish, June 17, 2013
Pork Barrel: The Janet Napoles - Legislators' Scam, August 04, 2013

Pork Barrel: The Janet Napoles - Legislators' Scam

Abolish pork barrel. I support that, but I think this will happen 100 years from now, if ever. Legislators are deliberating on P2 trillion budget (this year) and nearly P2.3 trillion next year, and they have no pork barrel out of it?

Minimal Government Movement, before it became officially a think tank in 2008, issued a statement in September 2004, calling for the abolition of pork barrel, see the 5+ pages statement here.

About the current pork barrel scam involving several Congressmen and Senators, to the tune of around P10 billion, I did not follow it much. Keywords are Ms. Janet Lim-Napoles (JLN), her company JLN Corp., Sens. Bong Revilla, Jiinggoy Estrada, Gringo Honasan, Juan Ponce Enrile, others.

A friend posted in facebook a story from Mom and Pop Moments blog about this scam. It has gone viral, good. The author posted this,

… revelation of Ms. Napoles’ children’s extravagant lifestyles taken from their own personal blogs that they have neglected to discontinue in time.  (See full article and video here: Napoles’ daughter blogs about lavish lifestyle andNapoles daughter flaunts family’s wealth) This information only strengthens the possibility that the accusations against Ms. Napoles and the senators just might be true…. 

In my curiosity, I went to the website of Ms. Janet Lim Napoles’ corporation called JLN Corporation to check out whether or not her claims of legitimately earning her wealth have any grounds.  Surely, if they had this huge business capable of sustaining their lifestyle, it would reflect in their websites and will have an impact on some business news if I search it online.

Nothing.  Nada.  Zip.  Zero.

The website is a shell of a site devoid of any information.  It does not mention ANY products or specific services offered.  It’s just a hodgepodge of photos and mentions of exciting industries obviously taken online with no real indication of how they are directly involved in said industries.….

Then many comments followed. As I post this around 10 am Sunday, there are 403 comments already. What is interesting are the details given by “Anonymous”, which I am copy-pasting below. He/she seems to be an insider, although I cannot vouch for the statements. Maybe other readers here can verify or shoot down his/her comments.

There were also other “Anonymous” commenters, but they did not produce new or substantial details, only exhortation to violence like “patayin na lahat ng mga Congressmen at Senador” or “only a violent revolution against the legislators is the solution.” To me these are garbage, I do not believe in violence and I will never endorse such action.

To see the 400+ comments (and counting), just check that blog, again at

http://momandpopmoments.com/2013/07/31/janet-napoles-pork-barrel-scam-theft-from-a-nation/#comment-229

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Anonymous says:

AUGUST 1, 2013 AT 6:43 PM

Janet Lim Napoles has strong ties before with the late Emilia Boncodin, DBM Secretary. Emilia is the one that keep Janet in the loop whenever a budget or SARO is approved and to which senator or congressman.

Gringo Honasan is a dear friend of Janet’s husband, Jimmy Napoles. I was surprised when I read somewhere online when Honasan was interviewed and he said that he doesnt know the Napoles family.

During the coup in Cory’s time, Jimmy napoles was driving a tank on the way to camp crame when he’s tank was hit by a mortar.Jimmy is operating the .50 caliber machine gun and the soldier driving the tank died during the blast. Jimmy survived and was jailed along with Honasan. If you can get clear photos of Jimmy Napoles online, you will see that part of his face and his arms show burn marks.

Their wealth started to build up during the late 90′s when they engaged themselves with mayors based in zamboanga to use them as a front for a Foundation that will implement projects or deliver farm materials. With connections at COA, they were able to arrange “completed projects” without delivering anything. They established JLN group of companies sometime in 2000 and they moved to their new office from AFPOVAI to Discovery Suites on the 25th floor.

Soon enough, they were able to develop deep connections with more legislators in congress and numerous senators. What JLN Group Of Companies do and their sub-companie, Jo-Chris Trading (named after their eldest child, Jo-Christine “Neneng” Napoles) – they use their foundations as the implementing agency for the funds of congressmen or senators. You see, congressmen and senators have budget, PDAF or the “pork barrel”, but these politicians do not have direct access to their funds and they can never touch it. So what they do is the politicians will create a project (common one is “fertilizer distribution” to farmers) and will ask DBM to set the budget. Then, there will be a public bidding to be held by DAR. The outcome of the bidding is already fixed and it’s Napoles foundation wins. The fund or SARO will be released through Janet’s foundation and the congressmen/senators will ask 70% of the whole amount. So if the project is 10M, Janet will give 70% of that. Usually Janet’s nephew, John Francisco Lim is the courier of the money, they will meet at Podium or at a parking lot. The money are stored in plastic bags or paper bags.

So, whatever is left from the budget, 30% goes to Janet. They usually cash-in the cheque they get from DBM at Landbank in Greenhills and the manager there is part of Janet’s payroll. Janet also need to pay the inspectors from COA and whoever is involved in DAR.

This is their workflow. This is what they do for more than a decade. This is how the senators and congressmen make money. This is why these politicians have so much and working class filipinos almost have nothing. This is not only Janet’s fault. The greediness of the senators and congressmen are the driving point that keeps this system operating. It is also amazing that if Janet’s family and her company goes into trial, the people who will try them – judges, senators, congressmen, are also part of this. I fear for the life of Benhur and Merlina as whistleblowers. Soon enough they will die. The people of the philippines should protect them. NBI or the witness protection program cannot do anything about it. Because they are keeping the whistleblowers alive for their own use only. Once Janet give payments to the NBI and once Revilla, Honasan, Arroyo, Pichay, Ducut, Pineda, Lim, Estrada, Soto, Lapid, and almost all the congressmen who were in post for the past decade, step in – there’s nothing benhur or merlina can do. They are as good as dead by now.

Please post this on your social media and share it to the world. It is time to stop this madness and remove the pork barrel and protect benhur and merlina.