Juncture

Drug-users, much like the poor, will always be with us.

The most the so-called “war on drugs” can hope to accomplish is to cut down the scale of the problem, shut down the inroads of the drug cartels in our politics and throw the biggest traders in jail. Somehow, somewhere, some idiot will still manage to pick up the habit and some pusher will figure out a way to peddle banned substances.

There is little debate, though, about the fact that the intensified campaign against illegal drugs mounted since President Duterte came to office hit home hard. Over a million drug users have registered with the police. Supply shortages and the risk of doing business have pushed up the price of meth beyond the reach of impoverished dependents. Numerous drug labs have been shut down. We now have the commitment of Beijing for Chinese government support to cut the supply of illegal substances at the source.

We might have crossed the threshold into the realm of diminishing returns on the  “war on drugs.” There is still a need for special police units to continue relentlessly pursuing drug dealers. There is surely a need for the DOH to maintain the expanded rehab centers for treating repentant addicts. But this “war’ should cease to be the end all and be all of the administration.

The most notable critics of the administration pick on the number of deaths associated with the “war on drugs” and accuse government of indulging in a campaign of “extra-judicial killings.” That remains a controversial point, however. The death toll from ordinary homicides and murders has been high even before the Duterte-led campaign was launched. But the President’s intentionally provocative remarks, including that last one about granting a pardon to the policemen involved in the killing of the jailed mayor of Albuera, Leyte, have been used to great propaganda effect by the critics.

It is time for the President to step back from his obsession with the “war on drugs” and speak on the thousand other things his administration should be concerned with. Among those are the urgent efforts to seize the opportunities of the moment and build a truly inclusive pattern of economic growth for the country.

During the six years this administration will be in power, the Philippine economy will be in a very interesting phase.

We will have, on one hand, a “Cinderella moment” where relatively low interest rates, strong international support, a stable fiscal position, good credit ratings and a benign oil price regime allow our economy to surge ahead. This moment could pass and opportunities lost for the people. This is the moment for government to take audacious steps to reshape our economic growth.

On the other hand, we are looking at a “demographic sweet spot” where millions of young Filipinos will be entering the workforce. While populations in the mature economies age rapidly, our workforce will be at its youngest. If government fails to deliver the promised 7% annual GDP growth, the advantage could turn into a disadvantage. Instead of an asset, the young but unemployed manpower could quickly turn into a liability. The unemployed young workers could turn into a disillusioned generation, alienated from society and bereft of optimism.

The real historic challenge facing President Duterte is not so much winning the “war on drugs” but winning the economic opportunities of this moment.

Both the “Cinderella moment” and the demographic “sweet spot,” occurring at a conjuncture, could quickly pass. If government fails to do what it has to do, the Duterte government, like the Aquino government before it, could be remembered as the one that squandered the nation’s opportunities.

The key to seizing this conjuncture is the comprehensive tax reform package now under congressional consideration. That package will align our tax rates with the rest of the region so that they cease being a disincentive to investments. It will raise the volume of revenues required to deal with our infrastructure backlog and invest in our human capital.

Among the main reasons for our falling behind our regional neighbors is our low investment in infrastructure. In the aftermath of the debt crisis that crippled the economy in the mid-eighties, we entered into a period of fiscal consolidation. One by-product of that long period of austerity was under-investment in infra. For nearly three decades, our neighbors invested twice what we did (as a percentage of GDP) in building up their infra. The result of that is that costs of production in our economy became uncompetitive. That caused our manufacturing sector to hollow out and our economy to be dependent on consumption instead of investments.

Unless our economy becomes investments-led, we cannot produce the jobs we need to bring down poverty rates. Investments will not happen unless new infra makes our economy more efficient. Budget Secretary Ben Diokno promised a “golden age for infrastructures.” We can only hope he delivers on that.

Nothing has greater multiplier effects on the economy than investments in infra. They not only create jobs directly, they raise land values and open investment opportunities. Infra keeps on producing new wealth for the economy for as long as they are usable.

Investments in much-needed infra, however, needs a lot of money. Some of the large infra projects will be funded by foreign grants such as the billions coming from China and Japan. Still government needs larger and more stable revenue flows to support investments in new irrigation, education and public health.

This should be the moment for President Duterte to start addressing what we need to do for the economy.