By ALDRIN VILLEGAS

More than three decades after the dictatorship of late President Ferdinand Marcos was toppled, the contested legacies of his “New Society” remain as one of the most polarizing stories in our history. It is viewed as either the “Dark Chapter” in the country’s history, or the “Golden Age” for the Philippine economy.

Many Filipinos today find relief in the second version amid growing frustrations over the failures of succeeding administrations, from heavy traffic to perennial poverty. In a post-People Power state of mind, people choose to forget half the time the horrors of Martial Law, says Assistant Professor Richard Heydarian of De La Salle University. 

From a “Marcos pa ‘rin” vandal defacing the People Power Monument to social media posts saying, “Marcos was the best president the country ever had,” people are not just simply forgetting but actively constructing a past. However, there is a danger in this version of a past that never really existed: a deceptive nostalgia that the Marcos years were a period of peace and prosperity, according to a statement released by the UP Department of History. 

As the “Architect of the New Society,” Marcos justified Martial Law through the supposed success of the economy. However, unpacking his manufactured reality reveals an economic record that has only one story to tell—a crisis in the guise of the myth of a golden age.

1. Work Conditions

Contrary to the notion that industrialization characterized the New Society, crony capitalism was the defining system that dominated the economy. Marcos’s cronies were awarded industries, from television to car manufacturing, and ambitious industrial projects such as the Bataan Nuclear Power Plant (BNPP).

Many of these, however, ended up impractical and bankrupt. It led to the stagnation of the manufacturing sector, which should have been the backbone of the economy. The productivity per worker also increased, if only at a rate of less than two percent, the slowest in East Asia. 

“The process of growth via government deficits can be sustained without huge increases in foreign indebtedness only if the expenditures are validated by increasing productivity per worker. In any event, this was not what occurred in the Philippines,” UPSE faculties noted in their critique. 

Alongside the downfall of productivity is the decrease in employment rate, where the number of jobless shot up from 5.2 percent to 5.9 percent from 1978 to 1983, while underemployment tripled from 10.2 percent to 29.0 percent.

These numbers provide a glimpse of poverty and the deteriorating welfare of Filipino households during that time. As a result, there was a rise in the number of overseas Filipino workers after 1986, with dissatisfaction in the labor force, especially among skilled workers.

Both the agricultural and fishery sectors also suffered in the New Society. Agricultural output went down by 30 percent between 1972 and 1980, while the increase in fishery output has gone to commercial fishing operators at the expense of small fisherfolk. 

Under Martial Law, Marcos was trading basic human rights for the nonexistent economic gains. In November 1975, during a period of national emergency, he prevented labor union strikes altogether. “The Martial-Law regime prohibited strikes in so-called vital industries, such as public utilities, transportation, communication, oil refining and distribution, banking, hospitals, schools,” says Director Leonardo A. Lanzona Jr. of the Ateneo Center for Economic Research and Development.

2. Infrastructure

The myth of progress under the New Society is heavily founded on Marcos’s infrastructure projects that exist today. Pioneering hospitals were built, such as the Philippine Heart Center, the Lung Center of the Philippines, and the National Kidney and Transplant Institute. Government support for the arts was also manifested in architectural projects commissioned by Imelda Marcos: the Cultural Center of the Philippines, the Philippine International Convention Center, and the Makiling Center for the Arts, among others.

“His unparalleled achievements and contributions to the country, especially in infrastructure development, albeit persistently shunned from the spotlight, will remain as his lasting legacy. For as long as they stand, Marcos lives,” says economist Gerardo Sicat, one of Marcos’s top technocrats.

Yet this legacy comes at a huge price. According to Sicat’s colleagues from the UP School of Economics (UPSE) in their critique of the economy during Martial Law, the heavy spending increased government deficits from P0.8 billion per year to P2.3 billion, which could not be covered by domestic savings. Consequently, the gap had to be funded by foreign borrowings, where debt quadrupled from USD2.6 billion to USD10.5 billion in 1980.

Worse, 33 percent of the country’s borrowing in Marcos’s term was pocketed by himself and his cronies, a staggering USD8 billion, according to think-tank IBON foundation. Of all his infrastructure projects, the Bataan Nuclear Power Plant (BNPP) stands as the symbol of failure and wasted resources. Costing USD2.3 billion to build, the BNPP requires P40 million a year to maintain it—a sinkhole through which financial resources poured out for zero watts of electricity.

3. Foreign Debt

“The experience of the less developed country borrowers is filled with irony, but nowhere is this more apparent than in the Philippines,” the National Bureau of Economic Research stated. From a USD1 billion debt at the start of Marcos’s term, foreign debt soared to USD28 billion when he fled the country in 1986—an amount Filipinos will pay until 2025, 39 years after people ousted him from office.

Economist Ronald Mendoza says, “debt is not necessarily detrimental to a country’s economic growth and development, when managed well and invested judiciously.” But this was not the case in the New Society.

The centralized form of government made it easier for the state to spend on capital outlays using foreign money. With the imposition of Martial Law in 1972, public investment was primarily financed by foreign borrowing. As such, the decade of the 1970s was described as the period of “debt-driven growth.”

During this period, the Philippines became one of the heaviest borrower-countries in the world. Much of the money was channeled to infrastructure and promoting tourism. Yet the country lagged behind its Southeast Asian neighbors in terms of gross domestic product (GDP), the total market value of all goods and services produced domestically. Countries like Malaysia, Thailand, and Indonesia registered an average of 5.4 percent GDP growth rate, while the Philippines recorded an average of only 3.4 percent, which dropped to 1.4 percent in 1986. 

With the record-high government spending, the Marcos government was confronted with a sharp devaluation of the peso. According to Bangko Sentral ng Pilipinas, the peso-dollar exchange rate in 1966 was at P3.50 to a dollar, and in 1986, it was P20.53 to a dollar. ●

Sources: “An Analysis of the Philippine Economic Crisis,” “The Economic Ruins of Martial Law,” “The Truth About the Economy under the Marcos Regime,” “Marcos Years Marked 'Golden Age' of PH Economy? Look at the data.”

Published in print in the Collegian’s October 3, 2016 issue, with the headline “In Real Terms.”