Sovereign wealth fund — a review
Two types of governing elites are actors in this emerging theater, namely the political elites and the economic elites – joining hands to rule over body polity.
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Two types of governing elites are actors in this emerging theater, namely the political elites and the economic elites – joining hands to rule over body polity.
Unabashedly conceived from a family brand in people's subconscious, the Maharlika Investment Fund cum "sovereign wealth fund" is akin to an exotic dish that attracts interest on sight but proves sour to the taste. The grand feast is brought to the table as if the bill will not be shelled out from taxpayers' pockets. To be sure, it is like swallowing a bitter pill.
Even putting it mildly, the MIF reconstructs history from a position of power in proposed legislation incentivized by affinity or kinship. Scholars argue that "sovereign wealth funds have acted historically as instruments of state power."
With how things developed, the acts or gestures from those in the officialdom appear to communicate a formidable message — "Meet the new boss, same as the old boss" — however good or bad you choose to construe it. Furthermore, sovereign wealth funds are "de facto political instruments in both the domestic and international context."
It has become crystal clear where the "profit-maximizing investment logic" and the "public policy interests" intersect or intertwine. For what if such a fund would protect or favor a certain business or corporate interest akin to "behest loans" of recent memory?
Two types of governing elites are actors in this emerging theater, namely the political elites and the economic elites — joining hands to rule over body polity. Every member of the over-reputed economic team says his piece — all in the nature of convoluted rhetoric — even the sub-actors like the Bureau of Treasury, GSIS, SSS and so forth.
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However, in the end — adherents, advocates, and hardliners — all preach to the choir. For instance, the apologetic points raised by one of the authors in the Lower Chamber only foreground the inherent cleavages, gaps or red flags of what now crystalizes to be a "crude proposal" altogether.
There is no rational explanation in their "off the bat" acquiescence to forego the envisioned equity of GSIS and SSS — two big pension funds — of P125 billion and P50 billion, respectively in order to placate serious opposition from some quarters. Didn't it likewise announce the national government's withdrawal of the P25 billion earlier "pledge" carved out from the General Appropriations Act to the fantabulous equity game?
A leading light in the discipline (i.e Rawls theory, rent-seeking, Nash equilibrium) in an obvious rejoinder to the excuses pointed out by the defenders or patrons of Maharlika Fund has articulated most things no other economist at this critical juncture has propounded. Raul Fabella's reflections amount to saying, viz: It's the modern-day version of "behest loans" whereupon once made the "personal ATM" of FM 1; then "high-minded Oil Price Stabilization Fund was politicized" leading to near state bankruptcy; last, but not least, the country's debt load is courting a payment crisis at this crucial time.
Due to the fundamental flaw of SWF, it is deemed "bogus" in what Fabella likens to a "gambler's double down folly." For another, he raised concern about how weak the rule of law ecology in the country is, its world ranking of 97th out of 140 countries — cause for reasonable doubt.
The irreverent economist rolls out a scenario and argues that positive returns of the sovereign wealth funds translate into "hefty private bonuses" while negative returns will be "socialized." In short, the working class receives the short end of the bargain. In mathematical terms, the fate of 1.7 million government employees and 40.49 million SSS-covered members (of which 3.36 million are self-employed and 5.07 million are voluntary members) — hangs in the balance.
The fact that proponents have pulled out GSIS and SSS from the original equation simply acknowledges the error of the state owning up to the pension funds in light of its plan to have citizen-employees' funds superintended by the heads of GFIs.
Two basic empirical proofs have been overlooked that should have first been presented — survey findings on the working class' willingness to pay and permutation in its cost-benefit analysis — if any.
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