Development means greater freedom

LET'S be clear about it: some of the data that the Heritage Foundation used to rank the Philippines in the 2006 "index of economic freedom" were erroneous and inaccurate.

The foundation castigated the Philippines for supposed 2004 "tsunami aid graft" when in fact the Philippines was not affected at all by the Indian Ocean tsunami that ravaged some near-shore communities in Indonesia, Thailand, Sri Lanka, India, Maldives, Myanmar, Malaysia and Seychelles. So there is nothing about "tsunami aid graft" to speak of. The last time the Philippines had tsunami was in 1976 and foreign aid then hardly came. It seems like this institution needs to brush up on its basic history and geography. Nevertheless, we agree with the argument that countries need to score high on "economic freedom" in order to attain long-term and sustainable economic growth.

It is clear that the Index of Economic Freedom is part of the foundation's advocacy toward "free enterprise, small government, individual freedom and traditional values." It is obvious that the institution subscribes to these principles for the outcome that they are supposed to catalyze—greater trade, higher economic growth and benefits that the bigger pie should generate.

Policy reforms, however, should go beyond that. We believe that—as put succinctly by Nobel Prize economist Amartya Sen from Harvard University—freedom should be the means and the end of development, and economic freedom should only be seen as one of the tools for achieving progress.

Definitely, there is a strong case for reforms in the country's trade and fiscal policy as pointed out in the report. Undue restrictions imposed on foreign investments are among the major reasons-besides the lousy infrastructure-why the Philippines has not been on the radar screen of foreign investors. And if there are two institutions that continuously give us black eyes in the international community, these are the Bureau of Customs and the Bureau of Internal Revenue.

Yes, we need to reform these institutions and policy regimes so we can remove constraints to entrepreneurship. To quote Amartya Sen, "We have good reasons to buy and sell, to exchange and to seek lives that can flourish on the basis of [market] transactions. To deny that freedom. . . would be in itself a major failing of society."

Nevertheless, we believe that economic freedom as defined by the report alone would not suffice to deal with the problems of developing countries like the Philippines. Contrary to arguments for "limited government," there is a stronger case for "bigger government" if only that should mean greater public expenditures for social services like better schools, infrastructure, adequate health facilities, social safety nets, and the continuing redistributive measures including agrarian reform.

In the United States , the conservative agenda has so far led to cutbacks in social services, the reason why tourists visiting American cities could see an ever increasing number of homeless wandering around aimlessly in parks and public spaces. It's a puzzling scene in a society that is known to be the most powerful country on earth, economically, politically, and militarily.

Following Sen's logic, there should be more government efforts at engagement to promote "transparency guarantees" that should ensure people's "freedom to deal with one another under guarantees of disclosure and lucidity." Without greater transparency both in the private and public sector, there would actually be less economic freedom. Yes, we want economic freedom but we also want a caring society.